A major Indonesian Islamic organization has declared crypto ‘haram,’ meaning forbidden under Islamic law, because of its volatile nature.
Fatwa Against Crypto
The East Java branch of one of Indonesia’s largest Islamic organizations Nahdlatul Ulama (NU), has issued a Fatwa against the use of cryptocurrency, declaring it ‘haram,’ or forbidden, under Islamic law. As per Islamic law, the Fatwa, a nonbinding legal opinion, was reached through a discussion called a bahtsul masail, where representatives from NU and several Islamic boarding schools from East Java participated. The meeting was also attended by a cryptocurrency expert, who was invited by the East Java NU to explain the proper practice of crypto activity.
The announcement was made public via a statement on the official East Java NU website, where Chairman Kiai Azizi Chasbullah stated,
“The participants of the bahtsul masail have the view that although the government recognises cryptocurrency as a commodity, it cannot be legalized under Islamic sharia law.”
Cryptocurrency Akin To Gambling: NU
The reason behind this declaration is based on the inherent volatility associated with cryptocurrencies and the industry. Some Muslim scholars have even compared crypto to gambling as both are speculative sports. With gambling being strictly prohibited under Islamic law, cryptocurrency might also go the same route if other Islamic organizations deem it so. A representative from Lirboyo Islamic Boarding School in Kediri has pointed out the high prevalence of fraud in crypto activities, which takes away its legitimacy in the eyes of Islamic law. However, other Islamic organizations around the world have not condemned cryptocurrency as illegal.
Islamic Law Blocking Path Of Crypto Adoption
The declaration comes as a shock to the fast-growing crypto industry in Indonesia. There has been a growing curiosity about cryptocurrencies in the country, and it has raced to the forefront with the sudden influx of public interest in crypto investments. According to a study conducted by Australian blockchain education startup Coinformant, Indonesia is leading the world in crypto interest in 2021, after showing a massive 1772% annual increase in people engaging with crypto articles. Furthermore, the country has around 6.5 million crypto investors, overtaking the 5.7 million retail investors, according to the Indonesian Trade Ministery.
However, Indonesia is also home to the largest Muslim population in the world. Therefore, the Fatwa issued against cryptocurrency by its most influential Islamic organization could nip public interest in the bud.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.