A Comprehensive Framework for Jurisprudential Analysis of Cryptocurrency Varieties

Since the emergence of blockchain technology, its applications have garnered widespread attention across various industries. One of its most crucial applications lies in the financial markets, particularly in the capital market. Notable uses include tokenizing stocks, utilizing the technology for settlement and clearing, and establishing cryptocurrency ETFs. Given the significant price fluctuations in cryptocurrencies, investors have increasingly turned towards investing and trading in these digital assets. This shift was driven, in part, by the absence of financial instruments based on cryptocurrencies, exposing investors to the risk of capital loss. One of the initial steps taken to preserve investors interests and mitigate their investment risks was the creation of financial instruments based on cryptocurrencies like mutual funds. These funds, by employing professional management, specialized investment strategies, and diversification of assets, can markedly contribute to minimizing the inherent risks associated with investments for the investors and safeguard investors from price volatility risks and falling victim to speculators and day traders. This principle applies not only to the financial markets of Islamic countries but also to Islamic investors who show interest in these instruments. However, the legitimacy of these financial instruments, from a jurisprudential and Sharia perspective, alongside technical examinations, is a prerequisite for their introduction in Islamic countries. Various types of digital coins have emerged, each with different functionalities and natures. Therefore, this article attempts to categorize cryptocurrencies, present a jurisprudential analysis, and examine the legitimacy of various cryptocurrencies. The research methodology employed to achieve the objectives of this study includes library studies, content analysis, and the Focus Group. Initially, general principles of cryptocurrencies and the governing rules from a jurisprudential perspective were extracted through library studies. Subsequently, using content analysis, these cryptocurrencies were categorized, resulting in the classification of cryptocurrencies into five categories: Coins, and Tokens including Value tokens, Utility tokens, Security tokens, and Fake tokens. The results of this examination affirmed the legitimacy of Value, Security and Utility tokens but identified considerations for the legitimacy of Coins, contingent on specific conditions. Concurrently, Fake tokens, as determined by the results, were unequivocally deemed illegitimate.