From Paucity to Sanctity of Trust: Ethics of Cryptocurrency Use for Muslims in Central Asia

by Gulzhan Begeyeva

Since 2017, Central Asia has witnessed a burgeoning interest in cryptocurrency, propelled by the region’s emergence as a hub for crypto mining activities amid increasing restrictions in China. This, coupled with some regional governments’ intent to capitalize on the market for decentralized finance, has sparked notable public debates regarding the alignment of digital currencies with Islamic financial principles. As Central Asian Muslims question cryptocurrency’s permissibility and adal/haram nature, local religious institutions and experts have emerged as arbiters to establish the reliability and trustworthiness of the crypto financial instruments within the regional context. As a matter of fact, in 2019 and 2022 the muftiate of Kazakhstan has publicly proscribed the use of cryptocurrency for the country’s Muslims by issuing and reiterating a respective fatwa. Furthermore, albeit as of February 2024 the mufti of Kyrgyzstan hasn’t provided any fatwa on this matter, the country’s muftiate members actively advocate against the use of cryptocurrency among its public.

Using this case study of the public discussions around cryptocurrency in Kazakhstan, Kyrgyzstan and elsewhere in the region, our ongoing interdisciplinary research project aims to explore the growing field of Islamic financial ethics in Central Asia. We intend to understand how local religious authorities navigate the nexus between the state imperatives, local demand for Islamic financial expertise, and the global production of Islamic knowledge. One key aspect of our study is examining the link between sacred and trust. In particular, by focusing on how the governing bodies of Islam in Central Asia, i.e. muftiates, construe the phenomenon of cryptocurrency, we theorise how sacredness/sanctity can function as a powerful mechanism that insures trust and, as a result, cooperation among rational actors. Among other things, the present work illustrates what appears to be an altogether neglected aspect of the study of the concept of trust in current economic orthodoxy. Namely, it argues that David Krep’s (1990) paradigm setting article on trust in economics, which offers a solution for the problem of absence of trust arising from unforeseen contingencies occurring in transactions, suffers from theoretical incompleteness. The latter concerns the element of sacredness/sanctity that remedies the absence of trust dilemma in Krep’s model. To demonstrate this dynamic, the current study applies the thesis stemming from the economy of conventions – a French school thought that espouses interdisciplinary and institutionalist approach in economics.