Malaysia allows crypto in zakat payments

Malaysia has become the first country in the world to permit the use of digital assets for zakat payments, according to a report by New Straits Times (NST), a Malaysian news outlet.

 

The initiative is led by the Malaysian Federal Territories Islamic Religious Council's Zakat Collection Centre (PPZ-MAIWP), with CEO Datuk Abdul Hakim Amir Osman emphasising the importance of educating Muslims on fulfilling their zakat obligations in the context of blockchain technology and digital currencies.

In a statement, Osman noted that the Federal Territories' Islamic Legal Consultative Committee recently affirmed that digital currency is a tradable commodity, with business zakat set at a rate of 2.5 per cent, as per the report.

Reports suggest that Malaysia is home to approximately RM 16 billion (RM = Malaysian Ringgit) worth of digital assets, which now fall under the scope of zakat. The initiative is particularly aimed at engaging the younger generation, with statistics showing that over half of crypto investors in Malaysia are aged between 18 and 34.

The introduction of cryptocurrency as a legitimate form of zakat payment reflects Islam's capacity to adapt to the evolving technological landscape, demonstrating its relevance to contemporary issues. This shift comes at a time when zakat collections from digital assets have seen substantial growth. 

In 2023, zakat collected from digital assets amounted to RM 25,983.91, a 73 percent increase over the previous year. By 2024, the amount has risen to approximately RM 44,991.97, according to the report.