FAQs: Zakat on Digital Assets
FAQs: Zakat on Digital Assets
1. Is there Zakat on digital assets?
Yes, Zakat is payable on digital assets. However, the Zakat treatment of any particular digital asset depends
2. Why is there Zakat on digital assets?
As a principle, Zakat is payable on money, money owed to you, gold, silver, trade stock, animals and animal produce.
Digital assets that are designed as payment systems and media of exchange, will be treated as money for Zakat purposes. Hence, Bitcoin will always be subject to Zakat.
Digital assets that are simply bought to resell for capital gain purposes, will be treated as trade stock, and also subject to Zakat.
If digital assets do not incorporate any of the above, they will not be subject to Zakat.
3. What is the Zakat on Fasset’s listed digital assets?
BTC - always Zakatable
ETH - only Zakatable if bought to resell for capital gain
USDC - always Zakatable
SOL - only Zakatable if bought to resell for capital gain
PAXG - always Zakatable
USDT - always Zakatable
4. What determines the Zakat treatment of digital assets? The Zakat treatment of digital assets depends on the investment strategy in the digital asset and the type of digital asset itself.
5. How is Zakat calculated for trading digital assets? For trading digital assets, Zakat is due on the full value of the digital assets. Trading is defined as an investment with the sole intention to sell and capture positive price fluctuations.
6. What is the Zakat treatment for buy-and-hold crypto investments? For any digital asset purchased with an intention other than trading, Zakat will depend on the type of digital asset.
7. Is Zakat due on all types of digital assets? Zakat is always due on coins/exchange tokens/payment tokens at 100% of your current holding value regardless of the intention. The Zakat treatment for other types of digital assets varies based on the asset and the investor's intention.
8. How are security tokens treated under Zakat? If security tokens are purchased to resell, they are Zakatable at 100% of the current holding value. If purchased for dividend income and long-term investment, Zakat will depend on the underlying assets of the company.
9. Are utility and platform tokens subject to Zakat? Utility and platform tokens are subject to Zakat if purchased to resell, at 100% of the current holding value. If purchased to use, Zakat will not be due on these tokens.
10. What is the Zakat treatment for asset-backed tokens? If asset-backed tokens are purchased to resell, they are Zakatable at 100% of the current holding value. If purchased as an investment, Zakat will depend on the underlying asset, and if it is a Zakatable asset, it will be Zakatable.
11. Do governance tokens require paying Zakat? If governance tokens are purchased to resell, they are Zakatable at 100% of the current holding value. If purchased to use, Zakat will not be due on these tokens.
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