Trading in cryptocurrencies and the requirements of religious law

I have had a long conversation yesterday with someone about trading in cryptocurrencies and the requirements of religious law. The person is generally a keeper of religious law, but he was still inadvertently and unknowingly involved in behaviour that is forbidden in religious law.

Even though religious law is quite similar in Judaism, Christianity, and Islam, it has also become clear to me that only Islamic law is axiomatic and mechanical. Its rules are effectively calculable. David Hilbert's pernicious Entscheidungsproblem about the predicate function isMoral(behaviour) does not seem to occur in Sharia.

Christianity, on the other hand, has the problem of the living magisterium of the Church, where religious law is not fixed until the very point at which the clergy has interpreted and adjudicated it. In Christianity, the law is not an axiomatic or mechanical device.

That problem has historically yielded a lot of trouble in Christianity. Cfr. the notorious event in Worms, Germany, where Martin Luther's argument through scripture and reason was rejected by the Papacy on grounds that the Bible itself is the arsenal whence each heresiarch has drawn his deceptive arguments.

The outcome of the conflict in Worms, Germany, firmly establishes the idea in Christianity that the scriptures are not a valid source of law in absence of centralized, hierarchical re-interpretation. Lack of consistency is also never a valid ground for challenging clerical authority.

Therefore, for interpretation/tafsir and jurisprudence/fiqh, I always fall back on Islamic law and its entirely mechanical devices, where every axiomatic derivation from scripture is always accepted as valid, subject to verification leading up to consensus/ijma.

A hodling trading strategy is an approach in which the cryptocurrency holder does not trade. He just keeps his savings away from the thieving and usury-infested hands of the fiat banksters. This strategy is obviously valid. Hodling amounts to doing nothing, while doing nothing with an asset is obviously permitted in religious law, on the condition that the hodler pays charity contributions/zakaat to the tune of 2.5% of his stash.

For example, if you hodl 10 BTC, you are supposed to give away 2.5% = 0.25 BTC to the poor, the needy, the stranded travelers or a few other categories of legitimate zakaat recipients (8 in total). The Zakaat levy is final and no new requirements can exist for this stash.

A second trading strategy is one in which the cryptocurrency holder seeks to buy at a discount, say 100%-5%=95%, and sells at a premium, say 100%+5%=105%. He makes money from flipping the coins around the spread.

This liquidity-providing, market-making strategy does not assume anything about future prices. Hence, it is not a form speculation-gambling/gharar-maysir. Furthermore, one currency is always traded for a different one, and never for itself (such as in derivatives). Hence, there is also no risk of riba/usury.

Other trading strategies may or may not be permitted in religious law.

There is, however, always this concern about speculation-gambling/gharar-maysir and usury/riba. Your alternative trading strategy must never assume future prices. If your trading strategy only makes money when the market prices go up/down, then it may be speculation-gambling/gharar-maysir, which is prohibited in religious law.

It is really important to pay zakaat/voluntary charity contributions, if only, because it spares you from paying jiziah/taxes to the heathens, such as personal income tax or capital gains tax.

The non bis in idem ("not two times on the same") taxation principle will cover your approach. Religious law insists that zakaat payers are exempt from jiziah. Only the heathens are subject to jiziah.

NOTE 1: I just got the remark that I forgot to mention that sadaqah i.e. extra/general charitable contributions are always permitted independent of the standard zakaat appropriation/contribution schedule.

NOTE 2: It is obvious that it is advisable to review non-standard trading strategies with ulema/religious scholars on their permissibility in religious law, especially with regards to gharar-maysir/speculation-gambling and riba/usury.