USDS
USDS#7979USDS is the US dollar stablecoin of Sky, the upgraded successor to DAI, convertible 1:1.
Fails our Shariah screening. Needs caution: nature of the asset, excessive uncertainty (gharar), and usage. Fails: interest (riba) and business model.
- 3 pass
- 3 caution
- 2 fail
Verdict history
- Not halalCurrent
First publication
Fundamentals, market picture and news will appear here.
Halal analysis
Can a Muslim hold USDS?8 Shariah criteria
3 pass · 3 caution · 2 failUSDS comes with a built-in savings rate that pays holders out of stability fees and other interest-type protocol income, and more than half of USDS is held in it.
Riba means interest or any guaranteed increase on a loan. A person who simply holds USDS receives nothing extra. But the Sky Savings Rate was launched together with USDS in September 2024 as part of its design: any holder can convert USDS to sUSDS and earn a rate set by Sky governance (3.60% a year in September 2026), which sky.money says is funded from aggregate protocol surplus and Sky says comes from fees on collateralised loans and returns on capital deployed into credit and fixed-income strategies.
Those sources are interest-type: stability fees on vault loans, yield on USDC in the Peg Stability Module, real-world assets such as tokenised Treasury funds, and agent lending. Uptake is large: $5.52 billion of the $10.04 billion USDS supply was held as sUSDS at the end of June 2026, and about 4.02 billion sUSDS sat on Ethereum on 27 September 2026. Because the token's own savings system pays interest-based income to holders, the criterion fails, as it does for DAI. The score is lower than DAI's because the savings rate is central to how USDS is promoted and used.
USDS is a working dollar token backed by surplus collateral, but no one is obliged to redeem it for dollars and official bodies disagree on whether crypto is property (mal).
Mal is property that Islamic law recognises as having value and that can be owned and traded. USDS has real use as a dollar-stable token, and Sky reported $12.32 billion of collateral against $12.22 billion of obligations at the end of June 2026. Unlike a fiat stablecoin, there is no issuer that must redeem USDS for dollars: its peg rests on over-collateralised loans, a 1:1 swap with USDC and governance-managed investments.
Official bodies also disagree about crypto in general: Malaysia's Securities Commission Shariah Advisory Council (2020) treats digital currency without an underlying asset as tradable goods on registered exchanges, while Egypt's Dar al-Ifta (2017), Turkey's Diyanet (2017), the UAE General Authority of Islamic Affairs (2018) and Indonesia's MUI (2021) prohibit dealing in it. None of them names USDS.
- Sky Protocol: Capital Allocation & the Sky Savings Rate (Sky Ecosystem Insights)
- Sky Protocol Achieves 2nd Straight Quarter with Over $100M in Revenue (Sky Frontier Foundation, PR Newswire)
- Resolutions of the Shariah Advisory Council of the SC - Securities Commission Malaysia
- Keputusan Ijtima' Ulama Komisi Fatwa se-Indonesia VII tentang Hukum Cryptocurrency - Majelis Ulama Indonesia
USDS is designed to hold a steady dollar value and is used for payments, savings and settlement, not for betting on price.
Maysir is gambling: winning or losing by chance rather than through productive exchange. USDS has no chance-based payout, and because it tracks the dollar there is little to speculate on in holding it; it is mainly used to hold value, pay and settle trades in decentralised finance. Leverage built with USDS loans is a use of the borrowing system, counted under riba and usage. CryptoUmmah also rates USDS low on speculation.
The protocol earns mainly from stability fees on loans and from lending, credit and fixed-income investments, far above the 5% limit for impermissible income.
This criterion asks how the issuer or protocol earns. Sky describes its revenue engine as the spread between the fees it charges borrowers and the yield it pays savers, and lists its revenue sources as Sky Agents deploying capital into credit and yield strategies (the largest), yield on USDC in the Peg Stability Module, stability fees from crypto vaults, and real-world asset vaults. At the end of June 2026 Prime Agent vaults held $6.84 billion, about 55% of collateral, with named counterparties including Janus Henderson, BlackRock's tokenised Treasury fund BUIDL, Anchorage and PayPal.
Sky reported $107.35 million of gross revenue for the second quarter of 2026. An exact split by source was not obtained, but interest on loans and interest-bearing investments is the protocol's main business, well above the 5% threshold.
Supply and contracts are public, but governance can upgrade the USDS contract at any time and much of the backing sits in off-chain and agent-managed investments.
Gharar is excessive uncertainty or hidden information in a deal. Much of USDS is transparent: its source code is verified, supply is public, governance votes are public and Sky publishes quarterly figures. Two points add uncertainty. First, USDS sits behind an upgradeable proxy that governance can point to new code; press reports at launch said it would have a freeze function, and although the current code has none, a holder cannot know the token's future rules.
Second, more than half of the collateral is placed through Sky Agents and institutional counterparties in credit and real-world assets that depend on off-chain parties, and no primary breakdown of the collateral mix was found.
USDS is used as a dollar for payments and trading, but a large share of it sits in the interest-type savings rate or is lent out.
This criterion looks at what the asset is actually used for. USDS serves as a dollar-stable means of holding value, paying and settling trades, which are permissible uses. A large part of its life, though, is interest-based: more than half of the supply was held as sUSDS at mid-2026, it is minted through fee-bearing loans, and it is supplied to lending markets and fixed-rate products. The main purpose is not impermissible, so the status is caution rather than fail, but lower than DAI's because savings use is larger.
USDS can be bought outright, held in one's own wallet and swapped 1:1 for DAI, though its contract is upgradeable by governance.
This criterion asks whether the asset can be owned in a permissible way. USDS is an ordinary token on Ethereum, Base, Arbitrum and Solana; it can be bought with full payment on exchanges, including Binance, which converted its users' DAI to USDS in 2026, withdrawn to a self-custody wallet, and converted to DAI and back at a fixed 1:1 rate with no fee. Ownership does not depend on derivatives or leverage. The score is lower than DAI's because governance could upgrade the contract in ways that restrict holders.
USDS gives open access to a transparent dollar token, with moderate harm beyond the interest counted elsewhere.
Maslahah weighs public benefit against harm. USDS offers anyone a dollar-stable token with public supply and governance, which helps people without good access to dollars and supports open payment and settlement. Its harms are the spread of interest-based credit and leverage, already counted under riba and business model, peg risk in market crashes, and the possibility that governance adds a freeze function. No link to fraud or sanctions evasion as a main use was found.
How you can use it
Tap a card for the ruling and sourcesBuying USDS with full payment and immediate delivery is widely available, but spot is acceptable only for a HALAL or DOUBTFUL asset. USDS is rated HARAM because its system is built on interest-bearing loans and investments and passes interest-based income to holders through the savings rate; a fully paid purchase does not change that.
No exchange-traded fund holding USDS was found. Any fund that lends USDS or earns the savings rate on it would fail.
USDS is used for payments and settlement, but tier-1 bodies such as Indonesia's MUI rule that using cryptocurrency as currency is not permissible, and several countries ban crypto payments.
USDS has no validation staking. Products called staking for USDS, such as stUSDS or SKY reward modules, fund loans or pay protocol rewards and should be judged as lending or yield.
Margin trading with USDS is never acceptable: it is a deferred exchange with borrowed money and leverage (AAOIFI SS 20).
Futures, perpetuals and options on or settled in USDS always fail under AAOIFI SS 20: deferred exchange without delivery, usually with leverage.
Lending USDS on DeFi markets or exchanges, or supplying it to stUSDS to fund SKY-backed loans, earns interest from borrowers; borrowing USDS against collateral means paying a stability fee. Both are riba.
The Sky Savings Rate (sUSDS), fixed-rate sUSDS products and similar pay a return funded by stability fees and interest-bearing investments, so they fail. Both screening firms that reviewed USDS reject the savings rate.
Scholars quotes
Penggunaan cryptocurrency sebagai mata uang hukumnya haram, karena mengandung gharar (ketidakjelasan), dharar (bahaya) dan bertentangan dengan Undang-Undang nomor 7 tahun 2011 tentang Mata Uang dan Peraturan Bank Indonesia nomor 17 tahun 2015 tentang Kewajiban Penggunaan Rupiah di Wilayah Negara Kesatuan Republik Indonesia.Sebagaimana mata wang yang lain, mata wang digital hendaklah tidak digunakan sebagai bayaran kepada barangan, perkhidmatan dan aktiviti tidak patuh Syariah seperti pembelian dadah, pelacuran, perjudian dan pendanaan aktiviti keganasan serta penggubahan wang haram.The SAC has also resolved that investment and trading of Digital Assets that fulfil the above requirements and which are traded on Digital Asset Exchange (DAX) registered with SC are permissible.Third: In light of the above and given the significant risks associated with this type of currencies and the instability of their transactions, the Council of the Academy recommends pursuing research and studies on issues affecting its ruling.Bitcoin is a digital currency that does not meet the legal and Sharia criteria that make it a currency subject to the rulings of dealing with official legal currencies recognized internationally.بناءً على ذلك: فلا يجوز شرعًا تداول عملة "البتكوين" والتعامل من خلالها بالبيعِ والشراءِ والإجارةِ وغيرها، بل يُمنع من الاشتراكِ فيها؛ لعدمِ اعتبارِها كوسيطٍ مقبولٍ للتبادلِ من الجهاتِ المخُتصَّةِ، ولِمَا تشتمل عليه من الضررِ الناشئ عن الغررِ والجهالةِ والغشِّ في مَصْرِفها ومِعْيارها وقِيمتها، فضلًا عما تؤدي إليه ممارستُها من مخاطرَ عاليةٍ على الأفراد والدول.Holding (Haram): Simply buying and holding USDS is non-compliant.The central Shariah issue is structural riba — protocol revenue comes from stability-fee interest and T-bill yield, and the native Sky Savings Rate mechanism (USDS to sUSDS) functions as a governance-set, interest-funded return resembling a guaranteed increment rather than a profit-sharing arrangement.According to research and opinion of experts so far, cryptocurrency is not considered ‘ maal ’ (wealth) in Sharia.Muhammadiyah memandang transaksi dan investasi kripto pada dasarnya mubah (boleh) tetapi dengan syarat tertentu.The opinion on this is the same as doing the same with any halal assets such as shares – 1) is permissible, 2) is more debatable and there are differing opinions on short-term trading.Our current position is 'tawaquf'; we can't say it is halal or haram, but we say it is better not to engage in itAs I mentioned at the beginning of this article it is not necessary to substantiate the permissibility of something as long as there are no prohibited factors involved in it or surrounding it.AI-assisted analysis checked against sources. Not a fatwa or investment advice.
Where it trades
10 exchanges from our coverage · no referral links
KrakenCentralized · USDS/USDVolume 24h$4.79KReliability7.4Halal productNo halal product- BBybitCentralized · USDS/USDTVolume 24h$15.7KReliability7.1Halal productIslamic account
- CCrypto.com ExchangeCentralized · USDS/USDVolume 24h$1.82KReliability7.0Halal productNo halal product
BinanceCentralized · USDS/USDTVolume 24h$275.2KReliability6.7Halal productShariah-compliant earn
OKXCentralized · USDS/USDTVolume 24h$65.97KReliability6.7Halal productNo halal product
Coinbase ExchangeCentralized · USDS/USDVolume 24h$30.19KReliability6.6Halal productNo halal product
GateCentralized · USDS/USDTVolume 24h$12.38KReliability5.9Halal productNo halal product
BingXCentralized · USDS/USDTVolume 24h$32.43KReliability5.8Halal productNo halal product
BitgetCentralized · USDS/USDTVolume 24h$15.29KReliability5.0Halal productNo halal product
MEXCCentralized · USDS/USDTVolume 24h$55.44KReliability4.7Halal productNo halal product
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Listings as of Sep 18, 2026
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