Nahdlatul Ulama issues fatwa and forbids the use of cryptocurrency under Islamic law.
Many people around the world have learned to embrace cryptocurrency. Since Satoshi Nakamoto’s invention of bitcoin, countless transactions happen every second. Businesses and individuals use digital currency as an investment and mode of payment. However, in Indonesia, Nahdlatul Ulama is not a fan of cryptocurrency.
Nahdlatul Ulama sees cryptocurrency as “haram”
The country’s Islamic organization cites cryptocurrency as “haram” or forbidden. It issued a fatwa and lead to a discussion called bahtsul masail. Nahdlatul Ulama Branch Management and several Islamic boarding schools representatives across East Java attended the dialogue.
Over the past year, cryptocurrency enthusiasm grew in Indonesia. The country increased a vast 1,772% in the number of individuals engaged with articles regarding cryptocurrencies this year.
The largest population of Muslims is in Indonesia, which has a flourishing digital currency industry. In May, the country reached about 6.5 million cryptocurrency investors. It overshadowed the 5.7 million registered retail investors in the Indonesia Stock Exchange, according to the Indonesian Trade Ministry.
“The participants of the bahtsul masail have the view that although the government recognizes cryptocurrency as a commodity, it cannot be legalized under Islamic sharia law,” announced Kiai Azizi Chasbullah, East Java Nahdlatul Ulama branch chairman.
The group concluded those virtual currencies as haram because of too many assumptions. They agreed that they cannot use it as a legitimate investment. Also, a Lirboyo Islamic Boarding School Kediri representative considers it unlawful. It’s because of the many deliberations, which also involve fraud.
A few Muslim scholars consider cryptocurrency as similar to gambling, which Islamic religious law also forbids. But, opinions differ, and other Islamic organizations worldwide noted that Islamic law authorizes cryptocurrency. Last year, Malaysia governs acknowledgment with Islamic law regarding finance. It disclosed its permission with digital asset trading.
They concluded that cryptocurrency use could compromise the legitimacy of financial transactions. Likewise, they see that the digital asset can be a tool for perpetrating fraud.
The rising popularity of Cryptocurrencies in Indonesia
Cryptocurrencies are growing immensely in Indonesia and continue to soar this year. In fact, there is a 40% increase in transactions in the first five months of this year. It is according to the 13 domestic exchanges’ data that the Futures Exchange Supervisory Board authorized. In 2020, the total volume reached 65 trillion rupiahs or $4.5 billion.
There are different points of view among experts, ordinary Muslims, and Islamic scholars through the years. A religious organization in the Russian republic of Ingushetia disallows any transactions concerning cryptocurrencies. It triggered negative reactions across social media.
Last month, a Malaysian leading sharia compliance expert claimed that crypto assets are legal commodities. Indonesian trade minister Muhammad Luthfi confirmed the country’s restrictions on cryptocurrency regulations. However, they will not ban the use of it, like what China did. He confirmed that the country will ensure to make cryptomarket less disposed to unlawful activities.
China, on the other hand, continued its campaign against the use of cryptocurrency trading. Its final prohibition in September also impacted Indonesian crypto prices.
At the moment, Indonesia accepts Bitcoin, Dogecoin, and Ethereum as legitimate assets and commodities. Citizens can use them to trade but not as a mode of payment.
Meanwhile, there are also progressive endeavors in Australia to establish the world’s first Sharia-guided decentralized finance (DeFi) platform. It will negotiate between DeFi’s advantages and Islamic finance’s beliefs.
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