Major Indonesian Islamic organization declares fatwa that crypto is ‘haram’
Indonesia’s Nahdlatul Ulama (NU), its largest Islamic organization in the country, has issued a fatwa calling the use of cryptocurrency “haram,” or forbidden, under the Shariah Law.
A fatwa is a nonbinding legal opinion on the Islamic Shariah law, that is reached through a consensus of learned scholars through a discussion council or bahtsul masail.
Religious representatives from the East Java wing of Nahdlatul Ulama Branch Management, including several Islamic boarding schools throughout East Java, were reported to have attended the bahtsul masail.
As per the country’s stats, interest in cryptocurrencies have surged in Indonesia over the last year. Earlier in October, a report by Coinformant had reported that Indonesia had witnessed a staggering 1772 per cent increase in the audiences who are engaging with articles written about cryptocurrencies during 2021.
Indonesia currently houses the largest Muslim population in the world, and currently, it is seeing a booming crypto industry. According to Indonesia’s Trade Ministry, the nation has gained about 6.5 million crypto investors by May 2021, thus overshadowing the 5.7 million retail investors already registered with the Indonesia Stock Exchange.
On the official website of the East Java Nahdlatul Ulama branch, its Chairman Kiai Azizi Chasbullah has been quoted as saying that the participants at bahtsul masail have concluded that even though the government recognises cryptocurrency as a commodity, “it cannot be legalized under Islamic Shariah law.”
The group has hence came to the conclusion that crypto has been deemed haram because it involves “too much speculation”, making it unsuitable to be used as a legitimate investment.
A representative from the Lirboyo Islamic Boarding School Kediri has also said that based on several derivations, mainly “the prevalence of fraud,” cryptocurrencies have been declared as “unlawful.”
Further, several Muslim scholars view the cryptocurrency industry as similar to gambling, which is strictly prohibited under the Shariah law. However, scholarly opinions vary, as many other Islamic organizations around the globe opine that the Islamic law permits cryptocurrency.
The Malaysian authority that oversees finance compliance with Islamic laws had last year announced that the body permits digital asset trading.
Meanwhile, in Australia, there are community efforts currently underway for building the world’s first “Shariah-guided decentralized finance (DeFi) platform” that would help people navigate between the advantages of DeFi and the beliefs under the Islamic finance laws. This would be a detailed course that people can attend and obtain insights from.
The Minister of Trade for Indonesia, Muhammad Lutfi, had in September told the local media that Indonesia had no plans of following China’s footsteps in imposing a ban on cryptocurrency transactions, trading or mining.