The 274th Shariah Advisory Council of Securities Commission Malaysia Meeting (16 November 2023)

Burning of Digital Currency Backed by Technology Without Any Underlying from the Shariah Perspective

The Shariah Advisory Council of the Securities Commission Malaysia (SAC) resolved in its 274th meeting held on 16 November 2023 that burning of Digital Currency Backed by Technology Without Any Underlying (DCWAU) based on the following mechanisms is permissible from the Shariah perspective subject to full disclosure in the whitepaper or mutual agreement by the DCWAU community:
1. Burning of transaction fees paid in the form of DCWAU; and
2. Burning of DCWAU in order to get the right to validate transactions on the blockchain commonly known as “Proof of Burning”.

This is due to the fact that both mechanisms do not involve any elements prohibited by the Shariah and such mechanisms may be considered as a form of fees payment to obtain certain rights or services.

This document belongs to Securities Commission Malaysia (SC). Full access to the original source is available here: https://www.sc.com.my/development/icm