Fitch: Cryptocurrency Adoption in Islamic Finance to Continue Gradual Development

Fitch Ratings expects cryptocurrency offerings in Islamic finance to continue developing gradually in some jurisdictions, supported by regulatory strategies and enabling regulations. However, adoption outside some markets is likely to remain uneven, reflecting divergent religious interpretations and lack of guidance from global Islamic finance standard-setting bodies.

The UAE is emerging as a global hub for virtual assets, with transaction volumes across entities regulated by Dubai's Virtual Assets Regulatory Authority reaching nearly USD680 billion in 2025. The Higher Shari'ah Authority of the Central Bank of the UAE deemed dealing in Bitcoin permissible in 2025, and since then, some conventional and Islamic banks have begun offering cryptocurrency brokerage and custody services.

Malaysia is among the more open jurisdictions for cryptocurrency adoption in Islamic finance, with its Shariah Advisory Council declaring several cryptocurrencies sharia-compliant between 2020 and 1H26. The total trading value on regulated digital asset exchanges increased by 23% yoy to over USD4 billion in 2025.

The absence of formal guidance from AAOIFI and the IFSB limits harmonization across jurisdictions, with some prominent sharia scholars considering cryptocurrencies non-compliant with sharia principles. However, several Islamic banks are indirectly involved in the cryptocurrency ecosystem by acting as payment gateways on licensed exchanges.