Is Profit from Halal Stocks or Crypto Allowed If Funded by Haram or Mixed Money?

Answered by Shaykh Muhammad Carr

Question

The profits are permissible if someone uses impermissible (haram) money to start a permissible (halal) business. Does the same principle apply to stocks and cryptocurrency? Would the resulting profits be acceptable if one invests in permissible stocks, ETFs, or crypto using impermissible or mixed funds?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. May Allah reward you for ensuring your sustenance (rizq) is permissible.

Allah says,

“O you who believe, eat of the good things for that which We have faithfully provided. And give thanks to Allah, if it be Him you worship.” [Quran, 2:172]

Impermissible funds must be returned to their rightful owners. If the owners cannot be found, the money should be given to charity on their behalf.

Notwithstanding the above, you are entitled to the profits of the investment. Ibn Hajr says, “If the usurper hunts with it (usurped hunting dog), the catch belongs to him, just as if he had usurped a net or a bow and hunted with them because it is merely a tool.’ [Ibn Hajar, al-Tuhfa]

For more on how to dispose of haram money, see here

And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefited from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.