Does Zakat Apply to Cryptocurrencies?

No, Zakat does not apply to cryptocurrency because its status in Islam is unclear. 

While some scholars consider it an asset, most advise against it due to its legal and ethical concerns.

Why Do Scholars Discourage Cryptocurrency?

The following are the reasons scholars doubt the status of cryptocurrency: 

1. Lack of Legal Recognition

• Cryptocurrency is not legally accepted in most countries, except for a few, like El Salvador.
• Since it operates outside traditional financial regulations, its legitimacy remains uncertain.

2. High Volatility & Speculation

• Cryptocurrency values rise and fall unpredictably, making it highly speculative.
• Quick profits and extreme fluctuations make it similar to gambling (maysir), which is prohibited in Islam.

3. No Central Regulation

• Unlike fiat currency, cryptocurrency is not governed by any central bank or financial institution.
• This makes it vulnerable to fraud, manipulation, and illegal activities.

4. Risk of Hacking & Cyberattacks

• Many people have suffered huge losses due to hacking and security breaches.
• The absence of government backing means there is no legal protection against such risks.

5. Ambiguity in Its Source

• The origin of many cryptocurrencies is unclear, raising ethical concerns.
• Some fear that their funding may involve money laundering or other illicit activities.

Since cryptocurrency's status is not clear in Islam, Zakat does not apply to it. Until proper regulations and rulings emerge, it is advisable to avoid dealing with cryptocurrency. 

And Allah knows best!