November 16, 2021
When is staking your crypto allowed?

Personal Finance


5 min read

There are three situations in the market currently where they use the word “staking” but mean something different each time. You need to learn what’s being *done* instead of just relying on the words used.

Situation #1: They take your crypto and pay you an interest rate, just like a cash on cash loan. This is Haram.

If staking means they take your coin and pay interest. It’s where you provide capital and they guarantee to return it along with a premium, regardless if you contribute any work, and regardless if they make more or less than the rate quoted.

Situation #2: They pay you from the crypto purchased by new coin holders. This is Haram.

If they take your coin and pay you from coins of new buyers, it’s Haram. This is a Ponzi situation and is considered misappropriation of other’s wealth (Arabic: أكل أموال الناس بالباطل) and is not permitted.

Situation #3: They take your crypto and use it to verify the blockchain and help compute on the virtual machine / network. This is Halal.

If staking means they take your coin and add it to a node to verify transactions, contribute to security, and provide computing functions AND your participation and rewards are not guaranteed but are contingent on selection and contribution criteria, then you are partnering with them and this is permissible.

These are my conclusions as of 15 Nov 2021, and if there are additions or changes I will add them in the future.


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