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25 August 2026 · crypto screening

How to Calculate Zakat on Crypto and Trading Profits

Short answer: Yes, zakat is due on cryptocurrency held for trading or investment. The standard calculation is 2.5% of your total qualifying crypto and cash holdings, valued at market price, once a full lunar year (hawl) has passed and your wealth stays above the nisab threshold throughout. Every claim below links to the actual primary source, Qur'an or Hadith, so you can read it yourself rather than take our word for it.

The Core Principles, and Where They Come From

Zakat is commanded directly in the Qur'an, alongside prayer, in numerous verses. The specific mechanics, the exact rate, the one-year holding period, and the nisab thresholds, are established through Hadith (the recorded statements and practice of the Prophet Muhammad ﷺ), which Muslims treat as the secondary source that explains and applies the Qur'anic command. Sources for each point:

  • Rate, 2.5% (1/40): established in a hadith narrated by Ali ibn Abi Talib, which specifies that on 20 dinars (gold) held for a year, half a dinar is due, exactly 2.5%. Sunan Abi Dawud 1573
  • Hawl, one full lunar year: the same hadith states plainly that "no zakat is payable on property till a year passes on it." Sunan Abi Dawud 1573
  • Nisab for silver, five awaq (200 dirhams): "There is no Zakat on less than five Awaq of silver." Sahih al-Bukhari 1447
  • Nisab for gold, 20 dinars: from the same hadith on the rate above. Sunan Abi Dawud 1573
  • Valuation at current market price, rather than purchase price, follows from zakat being assessed on wealth actually held on the due date, the position taken by the classical jurists interpreting the trade-goods hadith below

What Counts as Zakatable Crypto Wealth

Crypto held for trading or investment (which is how a bot like SharifBot uses it) is treated by contemporary scholars as arudh al-tijarah, trade goods, the same category stock traders' holdings fall into. This category comes from a hadith of the companion Samurah ibn Jundub: "The Messenger of Allah ﷺ used to order us to pay the sadaqah (zakat) on what we prepared for trade." Sunan Abi Dawud 1562. The hadith itself is about trade goods in general, applying it specifically to crypto is a scholarly extension (qiyas), not something named in the text, which is why individual guidance for your situation is worth seeking if you want certainty. Based on that extension, most contemporary Islamic finance scholars treat:

  • The full current market value of every coin you hold as counting, not just realised profit
  • Cash sitting in your exchange account or bank, waiting to be deployed, as also counting
  • Coins you're actively trading and coins you're holding long-term as both included, the trading/investment intention is what brings crypto into the zakatable category in the first place

A Common Mistake: Zakat on "Profit" Instead of Total Wealth

A lot of traders assume zakat is only due on their trading profit for the year, similar to how income tax works. That's not correct. Zakat is a wealth tax, not an income tax: the hadith above (Abi Dawud 1573) assesses zakat on the wealth itself held at the due date, not on gains during the year. If your portfolio is worth £10,000 on your zakat date, the 2.5% applies to that £10,000, not to whatever portion of it happens to be "profit."

How to Actually Calculate It

  1. Pick a zakat anniversary date (many people use Ramadan, but any consistent Islamic calendar date works) and stick to it every year
  2. On that date, total up every zakatable asset: crypto holdings at current market value, cash in your exchange account, cash in your bank, gold and silver you hold for investment
  3. Deduct any short-term debts you genuinely owe (not long-term liabilities like a mortgage)
  4. Check the result against the current nisab threshold (see the silver/gold hadith above). Below nisab, no zakat is due that year
  5. Above nisab, and held above nisab for the full year, pay 2.5% of the total

Worked example: suppose on your zakat date your exchange account holds £6,000 in various coins and £500 in uninvested cash, and you have no short-term debts. Total zakatable wealth is £6,500. At 2.5%, zakat due is £162.50.

What About Trading Bots Specifically?

Using an automated bot like SharifBot doesn't change the zakat calculation, it's still your wealth, held in your own exchange account, under your own name. What it does simplify is the valuation step: your exchange dashboard shows the live market value of every position, so on your zakat date you can total your holdings directly rather than trying to reconstruct values from memory or old records.

A Note on Grey-Area or Questionable Coins

If you've opted into trading grey-area coins, or a coin you held gets reclassified after a project changes its business model, there's a separate concept worth knowing about alongside zakat: purification of any profit that turns out to have come from a non-compliant source. This is not the same as zakat, it's a distinct precaution, and its basis is a hadith narrated by Abu Hurairah: "O people, Allah is Good (Pure) and He therefore accepts only that which is good (pure)." Sahih Muslim 1015, and the Qur'anic principle that charity purifies wealth, "Take from their wealth a charity to purify and bless them" Qur'an 9:103.

The general principle many scholars derive from this: if you later discover a trade was made on a coin that shouldn't have been considered halal, any profit specifically from that trade is best given to charity rather than kept or counted toward your own wealth, as a way of purifying it. Because it can be hard to know in advance which questionable coins might later turn out to be an issue, a reasonable precaution many traders take is setting aside a small extra amount, beyond your normal zakat, and giving it in charity to cover the possibility. This is a personal precaution, not a fixed calculation derived from a specific text, and a scholar can help you judge an appropriate amount based on your actual trading activity.

The Bottom Line

Zakat on crypto is calculated the same way as zakat on any other trade wealth: 2.5% of your total qualifying holdings, valued at current market price, once you've held wealth above nisab for a full lunar year, each point sourced directly to the Hadith above. Pick a consistent zakat date, total your holdings on that date, and apply the calculation. For anything specific to your personal financial situation, a qualified scholar is always worth consulting.

See SharifBot plans and start trading halal →

Frequently Asked Questions

Do I pay zakat on unrealised gains, or only when I sell?

On unrealised gains too. Zakat is based on the market value of your holdings on your zakat date, whether or not you've sold, per the trade-goods hadith (Abi Dawud 1562). This is the same principle that applies to zakat on stocks held for trading.

Is zakat due on crypto I'm holding long-term, not actively trading?

Generally yes, if it was acquired with the intention of investment or eventual sale for profit, it falls into the trade-goods category and is zakatable at market value each year. This differs from something you hold purely as a store of value with no intention to ever sell, which is a more debated area, worth asking a scholar about your specific intention and holding.

What if my crypto value dropped below what I paid for it?

Zakat is based on current market value on your zakat date, not your purchase price. If the value has dropped, you calculate 2.5% of the current (lower) value, not the amount you originally invested.

Does zakat apply to losses from bad trades?

No. Zakat only applies to wealth you actually hold on your zakat date. Losses simply reduce your total zakatable wealth for that year, there's no separate zakat consequence for having made a loss.

Can I use my bot's dashboard to work out my zakat?

Your dashboard's live balance and holdings view gives you the market value data you need (the number-crunching input), but the actual zakat calculation, nisab check, and hawl tracking are on you (or a scholar you consult), it isn't a substitute for proper zakat calculation advice.

References

Every Islamic claim in this article, linked directly to the source so you can verify it yourself:

This article explains the general, widely-accepted mechanics of zakat and links every claim to its primary source. It is not a personal religious ruling. For your specific financial situation, please consult a qualified scholar.

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