Do I pay Zakat on crypto? — Donate For Islam With Cryptocurrency

Yes, you do pay Zakat on crypto.

Zakat on Crypto: What You Need to Know
Zakat is one of the five pillars of Islam, and it is the obligatory charity that every Muslim who meets certain criteria must pay annually. Zakat is a way of purifying one’s wealth, expressing gratitude to Allah, and helping those who are in need. Zakat is calculated and paid on various types of wealth, such as money, gold, silver, livestock, crops, and business assets. But what about crypto? Crypto is a digital form of money that can be transferred securely and quickly over the internet. Crypto has become more popular and widely used in recent years, especially among young and tech-savvy Muslims. But do you have to pay Zakat on crypto? And if so, how do you calculate and pay it? In this article, we will answer these questions and provide some guidance on how to fulfill your Zakat obligation on crypto.

Do you have to pay Zakat on crypto?
The short answer is yes, you do have to pay Zakat on crypto, if certain conditions are met. these conditions are:

• You own crypto that is equivalent or above the nisab, which is the minimum amount of wealth that makes one liable for Zakat. The nisab is based on the value of gold or silver, and it may vary depending on the source and the date of calculation. You can use a Zakat calculator to determine the nisab and the amount of Zakat you owe.
• You have held the crypto for one lunar year, which is about 354 days. This means that you have not sold, exchanged, or spent the crypto during this period. If you have acquired more crypto during the year, you need to add it to your total and pay Zakat on it as well.
• You intend to use the crypto as a form of currency or investment, not as a personal asset or utility. This means that you have bought the crypto with the intention of reselling it, trading it, or using it for transactions, not for storing data, accessing services, or expressing opinions.

If you meet these conditions, then you need to pay Zakat on your crypto at the rate of 2.5%, which is the same as the rate for money. You need to calculate the market value of your crypto in your local currency at the time of paying Zakat, and then multiply it by 0.025 to get the amount of Zakat you owe.

You can pay Zakat on your crypto in different ways, such as:

• Converting your crypto into fiat currency and paying Zakat in cash or by bank transfer.
• Donating your crypto directly to a charity that accepts crypto donations, such as our islamic charity which works to provide humanitarian aid and relief to the most vulnerable and marginalized people around the world.
• Exchanging your crypto for goods or services that benefit the eligible recipients of Zakat, such as food, water, medicine, shelter, education, or protection.

We hope this helps you understand how to pay Zakat on your crypto and fulfill your religious obligation. May Allah reward you for your generosity and bless you and your family.

Originally published at https://islamicdonate.com on September 19, 2023.