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Zakat is a tax that is incumbent on all Muslims, assessed as a percentage of wealth held for a year. The belief in the obligation of zakat is one of the five pillars of islam and undeniable for believers. In fact, denying its necessity constitutes an act of disbelief or “kufr”.
Zakat is calculated as 2.5% of wealth held for a full lunar year above the specified amount. When calculating zakat payments, all assets must be considered. Money in bank accounts, precious metals, stocks, money owed to you, goods intended for sale, etc.
Yes, your cryptocurrency holdings also must be taken into consideration when calculating your wealth. Expenses and debts are also considered to balance out the ledger.
“Any cryptocurrency or token purchased to resell will always be Zakatable. Zakat is due on the market value on one’s Zakat anniversary. The cryptocurrency value should be converted into one’s local currency at the time of calculation. If a cryptocurrency is not purchased to resell, a coin currency such as Bitcoin, Litecoin, Ripple etc will still be Zakatable because of their utility as currencies within their ecosystem. Zakat on tokens not purchased to resell will depend on the nature of the token and what it represents.” ~ Mufti Faraz Adam
At the end of the day, the payment of zakat is mandatory for muslims who’s financial holdings have been in excess of the value of 87.48 grams of gold for a full lunar year. The USD value of 87.48g gold is around $4,813.15 (as of April 4th, 2021), but this value fluctuates slightly every day.
Calculating your zakat obligation can be complicated, but a quick Google search of “zakat calculator” will return multiple online services that you can use to determine your obligation.
