What arbun is
Arbun (عربون) is a sale contract in which the buyer pays a non-refundable down-payment that secures the right — but not the obligation — to complete the purchase at the agreed price within an agreed window. If the buyer completes the sale, the down-payment counts toward the purchase price. If the buyer walks away, the seller keeps the down-payment.
AAOIFI Shariah Standard No. 20 is the modern reference, building on classical-period precedents that include the narration from the second caliph Umar ibn al-Khattab regarding a land purchase with arbun. The OIC Fiqh Academy issued Resolution No. 72/3/8 in 1993 expressly recognising arbun as a permissible sale structure within stated conditions, settling a long-running difference between the schools.
How arbun differs from a conventional option
The shape of arbun resembles a call option in a few respects — the buyer has an asymmetric right, the seller is committed to deliver if called, the cost of the right is the down-payment. The structural differences that the cited sources rely on:
- Underlying asset must exist and be deliverable. Arbun is a sale of a specific identifiable asset, not a claim on a synthetic index. Cash-settled, asset-less option payoffs do not fit this shape.
- Specified delivery window. Open-ended optionality (perpetual options, rolling exercise) fails the AAOIFI requirement that the option period be defined in advance.
- Down-payment is part of the price. When the buyer completes, the arbun counts toward the purchase price — it is not a separately-priced premium for an isolated right. The premium-only payment shape of a conventional option is what the OIC Fiqh Academy resolution most pointedly distinguished from arbun.
- Spot-shape settlement. When the buyer completes, the resulting transaction is an immediate, fully-settled sale (bay) — not a cash-difference settlement.
These conditions collectively rule out most conventional crypto-options products (cash-settled, often perpetual or weekly, premium-priced as separate fee) from being read as arbun. Some structured-product designs that involve a real underlying with a defined delivery window can fit; each design is evaluated on its actual contract terms, not on the name used.
How arbun differs from salam and istisna
Three forward-shaped structures recur in classical fiqh, and they are easy to confuse:
- Salam: Full price paid up front, asset delivered later. Used historically for agricultural produce.
- Istisna: Manufacturing-to-order, with payment terms negotiated. Used for asset construction.
- Arbun: Down-payment up front, full price (less the down-payment) paid on completion. The buyer holds an exit option.
All three address future-delivery situations; they are not interchangeable. AAOIFI Standard 20 is explicit on the boundaries.
Where arbun fits relative to HalalCrypto
HalalCrypto's published execution layer is spot-only on a regulated venue with no derivatives integration of any kind. The reasons for that posture — including why the platform does not offer cash-settled crypto options structured as arbun-shaped products — are documented at /why-not-derivatives-futures-margin. The arbun entry exists in this glossary because subscribers occasionally encounter products that use the arbun label without satisfying the AAOIFI Standard 20 conditions; the entry is here so the distinction can be checked by name.
Quick reference
- Down-payment-secured sale: complete-and-take-credit, or walk-away-and-forfeit.
- Permissible per AAOIFI Standard 20 and OIC Fiqh Academy Resolution 72/3/8 within stated conditions.
- Conditions: deliverable underlying, defined window, down-payment is part of price, spot-shape settlement.
- Most conventional crypto-options products do not satisfy those conditions and are not arbun in substance.
- Distinct from salam (full prepayment) and istisna (manufacturing-to-order).