HCS Score
Red Line Violations
Research Opinion, Not a Fatwa
These are absolute prohibitions in Islamic finance. If any red line is triggered, the asset is automatically classified as HARAM.
Ecosystem Riba Exposure
Not directly or indirectly connected to interest generating mechanisms
Gambling / Betting
No gambling or betting mechanism
Haram Industry
Not involved in haram industry
Based on Red Line Screening and HCS Scoring.
Haram / Non Compliant
This cryptocurrency is evaluated as Haram for investment and use because the asset demonstrates material Sharia compliance concerns within the CoinStudy HCS framework.
Explanation
This asset shows significant concerns related to Sharia compliance, financial structure, or speculative design.
Reviewed by
CoinStudy Shariah Board
Usual arrived with an interesting pitch to the stablecoin market.
Most stablecoins — USDT, USDC, PYUSD — hold US Treasury bills as reserves and keep all the interest income generated by those reserves. The users who hold the stablecoins get nothing. The issuer captures all the yield. Usual positioned USD0 as the antidote to this — a stablecoin where the governance token redistributes ownership back to users, where the community gets a stake in the value the protocol generates.
The decentralization narrative is genuine. The governance redistribution concept is interesting. The $7 million funding from Kraken Ventures and IOSG Ventures is real.
But for Muslim investors, none of that changes what USD0 is backed by. And what USD0 is backed by is the same thing that makes every other conventional stablecoin haram.
We ran USD0 through the full CoinStudy Halal Crypto Standard (HCS) methodology. Here's the complete picture.
USD0 fails the CoinStudy HCS Sharia red-line screening. Three red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in an automatic Haram classification with no further scoring.
USD0 is the eleventh dollar-pegged stablecoin in our analysis series. It is the eleventh to receive a Haram classification. The reserve structure is the same interest-bearing model that has failed every conventional stablecoin we've analyzed.
Usual USD (USD0) is a stablecoin fully backed 1:1 by Real-World Assets — specifically US Treasury Bills. It aims to provide a stable, secure asset that is independent of traditional banking systems, fully transferable, and accessible within the DeFi ecosystem.
The Usual protocol also includes USD0++ — a yield-bearing version of USD0 — and the USUAL governance token which redistributes protocol ownership and revenue to token holders rather than keeping it centralized with the issuer.
The project's distinction from USDT and USDC is clear in its marketing — Usual explicitly criticizes conventional stablecoins for capturing all the Treasury yield themselves while giving users nothing. Usual's answer is to redistribute that value through governance tokens and yield-bearing products.
For Muslim investors, this distinction between Usual and conventional stablecoins is real — but irrelevant to the compliance assessment. The reserve structure is identical. USD0 is backed by Treasury bills. Treasury bills generate interest. That interest is Riba regardless of who it flows to.
USD0 operates through a reserve management system where every token in circulation is backed by US Treasury Bills held by the protocol.
When users mint USD0, equivalent value in Treasury bills enters the reserve. When users redeem USD0, Treasury bills from the reserve are liquidated to return the dollar value. The 1:1 backing ensures that every USD0 can always be redeemed for one dollar.
USD0++ extends this model — users can lock USD0 to earn yield from the Treasury bill interest that the reserves generate. This is the layer where the yield-redistribution narrative lives. The governance token USUAL further distributes ownership of the protocol's Treasury revenue to community participants.
The entire yield ecosystem that Usual has built — USD0++, USUAL governance rewards — is funded by one source: interest income from US Treasury Bills held in reserve. That interest income is Riba. The redistribution of Riba doesn't transform it into something permissible.
Usual's marketing makes a genuinely valid point about the conventional stablecoin model. When Circle issues USDC backed by Treasury bills, Circle keeps all the interest income. When Tether issues USDT backed by Treasury bills, Tether keeps all the interest income. Users hold a stable dollar token but receive none of the yield their capital is generating.
Usual's model changes who receives the interest — redistributing it to USD0++ holders and USUAL governance token participants rather than keeping it with the issuer.
From a conventional financial fairness perspective, this is a genuine improvement over USDT's model.
From an Islamic finance perspective, the recipient of interest income doesn't determine whether the transaction is permissible. The source of the income — US Treasury bills generating interest — is what matters.
Redistributing Riba more fairly doesn't make the Riba permissible. USDT is haram because it's backed by interest-bearing reserves. USD0 is haram for exactly the same reason. The fact that Usual redistributes some of that interest income to community members rather than keeping it centrally doesn't resolve the fundamental compliance problem — it just changes who benefits from the Riba.
USD0 is haram because its reserves generate interest income. USD0++ adds a second layer by allowing users to directly receive that interest income as yield on their locked USD0 positions.
If USD0 is a synthetic dollar backed by interest-generating reserves — USD0++ is a yield product that directly distributes that interest income to holders. It converts passive exposure to Riba-generating reserves into active receipt of Riba income.
Muslim investors should understand that USD0++ is significantly more directly problematic than USD0 itself — it moves from indirect Riba exposure through reserve backing to direct Riba income distribution. Both are haram. USD0++ is haram with additional directness.
USD0 is explicitly and completely backed by US Treasury Bills. The project's own description confirms this without ambiguity — "USD0 is a stablecoin fully backed 1:1 by Real-World Assets (RWA) like US Treasury Bills."
US Treasury bills are interest-bearing government debt securities. They pay a predetermined interest rate over their holding period. The entire reserve backing of USD0 consists of instruments that generate Riba as their primary economic function.
Every USD0 token in circulation is backed by assets that generate interest income. That income is the economic foundation of the entire Usual protocol — it funds the yield in USD0++, the rewards in USUAL governance tokens, and the operational sustainability of the protocol.
This is a direct and comprehensive Riba exposure. More transparent about the reserve composition than USDT — but structurally identical in the compliance-relevant way.
US Treasury bills generate guaranteed predetermined interest returns. This is their defining financial characteristic — they are risk-free government debt instruments that pay a known interest rate. The guarantee is provided by the US government.
Every USD0 token is backed by instruments that generate guaranteed interest. The Guaranteed Interest red line is triggered not by what Usual pays to users — but by what the reserves inherently are.
Synthetic Interest Products — USD0 and USD0++
USD0 is a synthetic dollar token that represents a claim on US Treasury bill reserves. Those reserves are interest-bearing financial instruments. USD0 is therefore a synthetic representation of interest-bearing assets — a synthetic interest product.
USD0++ is an even more direct synthetic interest product — a token that accrues value over time as Treasury bill interest flows from the reserves to USD0++ holders. It's a blockchain-native fixed-income instrument backed by government debt.
USD0 fails three red lines. Under the CoinStudy HCS framework a single failure results in automatic Haram classification. Three failures makes this result definitive.
Riba Exposure — ❌ Failed. USD0 is explicitly backed 1:1 by US Treasury Bills — interest-bearing government debt instruments that generate Riba as their primary economic function.
Guaranteed Interest — ❌ Failed. US Treasury Bills generate guaranteed predetermined interest returns. The reserves backing USD0 consist entirely of these guaranteed interest-generating instruments.
Synthetic Interest Products — ❌ Failed. USD0 is a synthetic dollar token backed by interest-bearing Treasury securities. USD0++ is an even more direct synthetic interest-bearing instrument that distributes Treasury interest income to holders.
Gambling and Betting — ✅ Passed.
Haram Industry — ✅ Passed.
Three red lines failed. Layer 2 scoring is skipped entirely.
Overall Result: Haram — Red Line Violations
CoinStudy has now analyzed eleven dollar-pegged stablecoins. Every single one has received a Haram classification.
USDT — Haram. Treasury bill and bank deposit reserves. USDC — Haram. Interest-bearing reserves managed by Circle. DAI — Haram. Debt-based creation with stability fees. PYUSD — Haram. Treasury bills and cash equivalents. USDG — Haram. Conventional reserve model. RLUSD — Haram. Treasury reserves. USDD — Haram. Synthetic stabilization with yield programs. United Stablecoin (U) — Haram. Standard fiat-backed reserves. TrueUSD — Haram. Bank deposits and treasury instruments. GHO — Haram. Collateralized debt with interest charges. USD0 — Haram. Treasury bill reserves.
Eleven stablecoins. Eleven haram classifications. The consistency reflects a structural reality — the mainstream approaches to creating stable dollar-pegged digital assets all involve interest-bearing financial mechanisms in some form.
Usual's governance model — redistributing protocol ownership and revenue through the USUAL token — is a genuine innovation over centralized stablecoin issuers. It's more community-aligned than USDT or USDC. More transparent. More participatory.
None of this changes the compliance assessment for the same reason decentralization never changes compliance assessments in our methodology.
Islamic finance evaluates financial structures — what the reserves are, where the yield comes from, what financial relationships are being created. It doesn't evaluate governance models or ownership structures as compliance criteria.
A community-governed Treasury bill stablecoin is still a Treasury bill stablecoin. Decentralized management of interest-generating reserves doesn't transform the interest into something permissible. Community ownership of Riba revenue doesn't make the Riba halal.
USUAL — the governance token — is a separate token from USD0. Its compliance would require separate analysis.
USUAL's value is tied to the growth of the Usual protocol — a protocol that generates revenue from Treasury bill interest income. If the protocol grows, USUAL becomes more valuable. If Treasury bill yields increase, the protocol generates more revenue, making USUAL more valuable.
The USUAL token's value is structurally connected to the growth of a protocol whose revenue is Riba-based. That connection creates indirect Riba exposure for USUAL holders similar to how other governance tokens are evaluated in our series. This brief note doesn't constitute a full USUAL analysis — but Muslim investors should be aware of this structural connection.
Before using any reserve-backed stablecoin, ask yourself:
What specific assets back this stablecoin — and do they generate interest income? Does the protocol's revenue model depend on interest income from government securities? Does holding or using this stablecoin support a protocol whose economic foundation is Riba? Does the "decentralization" or "governance redistribution" of the protocol change what the reserves fundamentally are? Would the Islamic finance compliance change if the same Treasury bill reserves were managed by USDT instead of Usual?
For USD0 — the honest answers are consistent with every previous stablecoin in our series.
Usual USD (USD0) is classified as Haram / Non-Compliant under the CoinStudy Halal Crypto Standard.
Three Sharia red lines are triggered — Riba Exposure, Guaranteed Interest, and Synthetic Interest Products — resulting in automatic Haram classification. USD0 is fully backed 1:1 by US Treasury Bills. Treasury bills are interest-bearing government debt instruments. The reserves that back every USD0 token generate Riba income.
Usual's innovation in redistributing protocol revenue to community participants is acknowledged and genuine. The governance model is more community-aligned than conventional stablecoin issuers. But these governance innovations don't change what the reserves are or where the protocol's yield comes from.
Redistributing Riba income through governance tokens doesn't make the Riba permissible. Decentralizing the management of interest-bearing reserves doesn't transform those reserves into halal assets.
For Muslim investors — USD0 is the eleventh dollar-pegged stablecoin to fail the CoinStudy HCS screening. The consistent pattern reflects a consistent structural problem. The path to a halal stablecoin requires genuinely halal reserve assets — not better governance of interest-bearing ones.
Scholarly Disagreement — An Important Note
CoinStudy's HCS methodology classifies Usual USD (USD0) as Haram based on the structural Riba concerns in its reserve backing. The reserves that maintain USD0's dollar peg — US Treasury Bills held 1:1 by the Usual Protocol — are interest-bearing government debt instruments. This structural Riba triggers our red-line screening.
However CoinStudy's Shariah Board acknowledges a significant scholarly disagreement on this question that Muslim investors deserve to know about.
Some contemporary Islamic finance scholars hold that using dollar-pegged stablecoins purely as a medium of exchange is permissible. Their reasoning is rooted in a well-established Islamic jurisprudence principle — the sin of a prohibited act belongs to the actor who performs it, not to every person in the chain who subsequently uses the resulting product. Under this view, Usual Protocol commits the prohibited act by holding Riba-generating Treasury Bills. That sin belongs to the protocol. The Muslim who uses USD0 for basic payments or trading is not holding Treasury Bills, not earning interest, and not committing the prohibited act themselves.
This position is further supported by the fact that ordinary USD0 users never directly interact with the underlying Treasury Bills at all — receiving only dollar value upon redemption, with zero contact with the interest-bearing assets themselves. The distance between the user and the Riba-generating instruments is complete and direct — not merely indirect.
An important distinction specific to USD0 — the scholarly disagreement about medium of exchange usage applies to USD0 as a basic payment token only. It does not extend to USD0++ or USUAL token holdings where the user is actively and directly receiving Riba-generated yield income. Those products remain clearly prohibited under both the structural and usage-based scholarly views. Muslim investors should be careful to understand this distinction before engaging with any Usual Protocol product.
CoinStudy's HCS classification remains Haram because our methodology evaluates structural compliance — the Treasury Bill reserve structure triggers our red lines regardless of user intent or usage purpose. This is what the methodology is designed to do.
But Muslim investors should understand that this is a genuine area of scholarly disagreement — not a settled question with unanimous consensus. If you use USD0 purely as a medium of exchange for trading or payments and do not hold USD0++ or seek yield from the protocol — you should consult a qualified Islamic scholar for personal guidance on your specific usage.
The prohibition of the structure and the permissibility of the usage are two different questions that can have different answers. CoinStudy answers the structural question. The usage question requires personal scholarly guidance.
Why USDT and other stablecoins are Haram if FIAT is not ? Read here https://coinstudy.co/blog/why-usdt-is-haram-if-fiat-isn-t
Disclaimer: This analysis is provided for educational and research purposes only. This analysis is based on guidance from CoinStudy's HCS Shariah Board members. CoinStudy does not issue personal fatwas or financial advice. Please consult a qualified Islamic scholar for individual guidance.
Authoritative ruling from the Chairman of the CoinStudy Sharia Board.
"Scholars have differing opinions regarding USDT and other fiat-backed stablecoins. Some scholars consider it impermissible and some consider it permissible. According to our research, its use is permissible. Its backend structure and currency leveling method is not interest in totality, however caution is necessary due to the presence of interest-based transactions within it. There is also an element of Gharar in that it is not certain that there is a dollar behind every unit. Despite this, its use as a digital currency is correct. If it is used in halal means the profit will be halal, and if it is used in haram dealings it will be haram."
This ruling applies to USDT and to other structurally similar fiat-backed stablecoins. CoinStudy's HCS structural classification remains as noted above, reflecting the interest-adjacent backend and Gharar elements the chairman himself identified. However the chairman's ruling confirms that using USDT or other fiat-backed stablecoins purely as a digital medium of exchange in halal transactions is permissible under his scholarly assessment. This is entirely consistent with the Scholarly Disagreement section published above.
Guaranteed Interest
No guaranteed interest obligations
Synthetic Interest Products
No synthetic interest instruments
3 Red Lines Failed
This asset is automatically classified as HARAM.
