However, various trading practices conflict with Islamic principles, rendering them Haram (prohibited). While some platforms claim compliance with Shariah law, a deeper examination reveals discrepancies. As a Muslim who has researched and consulted Islamic scholars, I aim to provide insight on how platforms like Binance can address these concerns and expand their reach within the Muslim community.
The prohibition of leveraged and futures trading in Islam centers around two key issues. First, leverage is viewed as Haram because it involves lending money with the expectation of repayment plus additional fees. However, profit-sharing is permissible in Islam. Platforms could resolve this by charging fees only on profitable trades, while unsuccessful trades remain fee-free. To balance costs, these performance-based fees could be higher, ensuring the platform covers operational expensesâa fair and mutually beneficial solution.
Second, margin and futures trading are considered Haram because Islamic teachings prohibit selling what one does not own. A potential solution would involve transferring the leveraged amount temporarily to the traderâs account, exclusively for executing trades. Once the position closes, the borrowed amount could be withdrawn by the platform, ensuring it remains available only for trading purposes. While spot trading is widely accepted as Halal, it lacks the profitability potential of futures markets. Platforms have an opportunity to innovate within these guidelines, creating a compliant model that allows Muslim traders to participate more actively and profitably in global markets.
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