Fatwa ID: 06618
Answered by: Maulana Mohammed Dilwar Hussain
Question:
Should Zakat be paid on cryptocurrency as well as ETFs (share baskets) if the amount in both is above the Nisab rate?
In the name of Allāh, the Most Gracious, the Most Merciful
Answer:
Allāh Ta’ālā has decreed, “Be steadfast in Salāh (prayer), and pay Zakāh, and bow down with those who bow down (in worship and obedience)”. [Surah Al-Baqarah; 2:43] [1]
The Prophet ﷺ said: “Pay a fortieth. A dirham is payable on every forty, but you are not liable for payment until you have accumulated two hundred dirhams. When you have two hundred dirhams, five dirhams are payable, and that proportion is applicable to larger amounts… [Sunan Abi Dāwūd; Hadith 1572] [2]
The first time your wealth surpasses the Nisāb amount, that would be your Zakat anniversary. You would need to record which day is in the Islamic calendar. One year from that day, you will need to calculate your total savings including but not limited to investments, assets, properties, any business stock and etc. Zakat is only paid out on savings and so you can exclude funds set aside for day-to-day spending. During the year, savings will fluctuate, they may increase or even decrease below the Nisāb. However, this will be disregarded and it will not impact your calculations. Consideration is only given to what has been accumulated by this Zakat anniversary day. After calculating total savings, 2.5% of that must be paid in Zakat to the poor, as the Hadtih above has clarified. A needy/deserved person must be made recipient and owner of that sum.
In later years, any new savings or income will simply be tallied on the Zaka anniversary day. You will not wait a subsequent year before paying Zakat on this. On the Zakat anniversary day, Zakat will be due on total savings, monetary and otherwise.
The Nisāb is the minimum amount of savings required before the payment of Zakat becomes mandatory for a person.
The Nisāb equivalent is;
Gold- 20 Dinars or 7.5 Tolas or 87.48 grams (Approx. £3,432.72)
Silver-200 Dirhams 52.5 Tolas or 612.36 grams (Approx. £361.29)
Since the era of the Prophet ﷺ the price of silver has drastically fallen whereas the price of gold has risen. Hence, the a great difference between the current figures for the Nisāb of gold and silver. [Radd ul-Muhtār; Vol. 3, pg. 224] [3]
Zakat is only payable on savings and profits. There is no Zakat on assets which are used to attain those profits. Whatever is purchased with the intention of resale will be subject to Zakat at the resale value. [Al-Hidāyah; vol. 1, pg. 203] [4]
To clarify, there is no separate calculation for crypto-currency and ETFs. All savings and assets will be tallied up together when doing the calculations at their sale value.
Only Allāh Ta’ālā knows best.
Written by Maulana Mohammed Dilwar Hussain
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
}[1]وَأَقِيمُواْ ٱلصَّلَوٰةَ وَءَاتُواْ ٱلزَّكَوٰةَ وَٱرۡكَعُواْ مَعَ ٱلرَّٰكِعِينَ {
[2]حَدَّثَنَا عَبْدُ اللَّهِ بْنُ مُحَمَّدٍ النُّفَيْلِيُّ، حَدَّثَنَا زُهَيْرٌ، حَدَّثَنَا أَبُو إِسْحَاقَ، عَنْ عَاصِمِ بْنِ ضَمْرَةَ، وَعَنِ الْحَارِثِ الأَعْوَرِ، عَنْ عَلِيٍّ، – رضى الله عنه – قَالَ زُهَيْرٌ أَحْسَبُهُ عَنِ النَّبِيِّ صلى الله عليه وسلم أَنَّهُ قَالَ ” هَاتُوا رُبْعَ الْعُشُورِ مِنْ كُلِّ أَرْبَعِينَ دِرْهَمًا دِرْهَمٌ وَلَيْسَ عَلَيْكُمْ شَىْءٌ حَتَّى تَتِمَّ مِائَتَىْ دِرْهَمٍ فَإِذَا كَانَتْ مِائَتَىْ دِرْهَمٍ فَفِيهَا خَمْسَةُ دَرَاهِمَ فَمَا زَادَ فَعَلَى حِسَابِ ذَلِكَ…
[3]أل فيه للمعهود في حديث (هاتوا ربع عشر أموالكم) فإن المراد به غير السائمة، لأن زكاتها غير مقدرتدة به. (نصاب الذهب عشرون مثقالا والفضة مائتا درهم كل عشرة) دراهم…
[4]ومن اشترى جارية للتجارة ونواها للخدمة بطلت عنها الزكاة، لاتصال النية بالعمل، وهو ترك التجارة. وإن نواها للتجارة بعد ذلك لم تكن للتجارة حتى يبيعها فيكون في ثمنها زكاة، لأن النية لم تتصل بالعمل، إذ هو لم يتجر فلم تعتبر، ولهذا يصير المسافر مقيما بمجرد النية. ولا يصير مقيم مسافرا إلا بالسفر. وإن اشترى شيئا ونواه للتجارة كان للتجارة…
