Is Trading Digital Gold Permissible?

Answered by Shaykh Muhammad Carr

Question

Recently, I started investing in gold—buying and selling digital gold for profit. But after the recent incident in Fasher, Sudan, my conscience is troubled about continuing this activity. Please advise me: should I stop, or would it be sinful if I continue?

Answer

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

May Allah (Most High) reward you for your ethical stance. Allah says,

“So be mindful of Allah to the best of your ability, hear and obey, and spend in charity—that will be best for you.” [Quran 64,16]

Trading in digital gold generally meets the requirements of Islamic contract law. However, the situation at hand is complicated by the ongoing conflict in the region, with gold at its center.

In cases like this, we follow the guidance of the Prophet (Allah bless him and grant him peace),

“Leave what makes you doubtful for what does not make you doubtful.” [Tirmidhi]

He also said,

“Righteousness is good character, and sin is what unsettles you, and you dislike others becoming aware of it.” [Muslim]

Permissibility of Investing in Digital Gold

Investing in digital gold, where ownership is represented electronically and backed by physical gold stored in secure facilities, is permissible when the digital format is Shari‘a-compliant, such as with ETFs and mutual funds. However, investing in formats like futures and sovereign bonds is not permissible.

I pray this is of benefit and that Allah guides us all.
[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 made significant contributions 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 member of the Shari‘a Board for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.