Helping Households Under Great Stress (HHUGS) has become the first Muslim charity in the UK to accept cryptocurrencies as a form of donation.
The London-based charity which provides financial, emotional and practical support to Muslim families impacted by counter-terrorism laws made the announcement last week.
HHUGS is now the first UK-registered Muslim charity to accept cryptocurrencies like Bitcoin, Bitcoin Cash, Ethereum and Litecoin as forms of donation.
Speaking to 5Pillars, trustee Fahad Ansari said: “The public interest in Bitcoin spiked in the second half of last year, and we became aware of potential donors who believed in the alternative currency and were eager to donate to our cause.
“This led us to explore the technical possibilities as well as Islamic and legal issues around cryptocurrency, to eventually accepting them as donations.”
Whilst a minority of scholars have taken clear positions on the matter, the vast majority of prominent UK scholars and European fatwa councils are still looking into cryptocurrency and blockchain technology.
When asked how HHUGS overcame this dilemma, Mr Ansari said: “We are aware of the controversy surrounding Bitcoin and other cryptocurrencies from a legal, financial and an Islamic perspective, which is why we carried out due diligence to make sure we are well within the legal, Islamic and ethical limits.
“From a legal standpoint, HMRC has released guidance on Bitcoin which at least legitimises the use of cryptocurrencies, and for all intents and purposes considers them currencies where VAT laws and capital gains tax apply, as they would to fiat currencies. There are also a number of prominent charities in the UK accepting Bitcoin donations and the number is increasing.
“From an Islamic perspective, we were aware of views in favour of Bitcoin, as well as those opposed to it in concept, and those who were neutral, and our trustees made a conscious decision to adopt the view that cryptocurrency is a legitimate type of currency which is subject to the laws of usury, Zakat and other Islamic laws that apply to all other currencies.
“We had confidence in a fatwa issued by the IslamWeb website, which is a subsidiary of the Qatari Ministry of Endowments, as well as another fatwa from the reputable IslamQA forum about digital currencies, and decided to take the leap to become the first Muslim charity in the UK to accept cryptocurrency donations.
“Since our last announcement, based on frequent requests, we are now accepting donations in Ethereum, Litecoin and Bitcoin Cash, the three most popular currencies after Bitcoin, which are now available at the popular exchange site Coinbase.
“Ethically, however, our long term interest is not to invest in cryptocurrency due to the volatility of the market, given that we are not at liberty to make such decisions on behalf of our donors. We therefore plan to cash all Bitcoin donations as and when they arrive, rather than allowing it to incubate in hope that it grows.
“However, if a donor would like to donate specifically for us to invest and grow for future sustainability of the charity, we would be eager to look into it.”
Besides discussions among financial and religious leaders, there have also been questions around the practical everyday use of crytpocurrencies aside from it being a digital asset with a store of value.
However, Mr Ansari confirmed that for now crytpocurrency will only be used by HHUGS for donations but it may have a wider purpose if there is mass adoption in the near future.
“For the moment, cryptocurrency will only be a means of donation. We do not provide support to our beneficiaries in form of cash for legal reasons and instead directly pay the vendor for their costs,” he said.
Mr Ansari added: “As more and more businesses adopt Bitcoin, we see a future where even some of beneficiary costs may be covered with Bitcoin or an alternative currency.”