The largest Islamic organization in Indonesia, Nahdlatul Ulama (NU) East Java branch, has issued a fatwa stating that Cryptocurrency is haram under Islamic law.
A fatwa is a non-binding opinion on Islamic law, reached through a discussion called Bahtsul Masail. Bahtsul Masail that issued this fatwa, was attended by representatives from the Nahdlatul Ulama Branch Management and several Islamic boarding schools throughout East Java.
In the past year, interest in cryptocurrencies has skyrocketed in Indonesia. Earlier this month, Coinfrormant reported that Indonesia experienced a massive 1.777% increase in the number of people engaging with articles about crypto during 2021.
Indonesia is a country with the largest Muslim population globally and has a rapidly growing crypto industry. The Indonesian Ministry of Trade noted that the country had gained around 6.5 million crypto investors; this number even surpassed the 5.7 million retail investors registered on the Indonesian Stock Exchange.
The announcement published on the Nahdlatul Ulama website quoted Chairman Kiai Azizi Chasbullah as saying that Bahtsul Masail participants agreed that cryptocurrencies could not be legalized under Islamic sharia law, regardless of the government that is already recognizing it as a commodity.
The group concluded that Cryptocurrency was deemed haram as it involves too speculative and, therefore, cannot be used as a legitimate investment.
Some Muslim scholars argue that cryptocurrencies are similar to gambling, which is prohibited under Islamic law.
However, there are other opposite opinions as other Islamic organizations worldwide say that Islamic law allows cryptocurrencies.
Last year, the Malaysian authority that oversees compliance with Islamic law in finance announced that digital asset trading was permitted.
Meanwhile, there is an effort in Australia to build the world’s first decentralized finance (DeFi) platform that uses sharia to navigate the path between the prominence of DeFi and Islamic financial beliefs.
In September, Indonesia’s trade minister emphasized that Indonesia would not follow China’s footsteps in imposing a ban on cryptocurrency transactions, mining or trading.