Major Indonesian Islamic Organization Outlaws Cryptocurrencies

The East Java branch of one of Indonesia’s largest Islamic organizations, Nahdlatul Ulama (NU), has issued a fatwa deeming the use of cryptocurrencies prohibited under Islamic law.

A fatwa is a non-binding legal opinion on Islamic law, reached through a discussion called bahtsul masail. Representatives from Nahdlatul Ulama (PCNU) Branch Management and several Islamic boarding schools in East Java participated in the bahtsul masail.

Interest in cryptocurrencies has exploded in Indonesia over the past year. Earlier this month, a report by Coinformant claimed that the number of people reading cryptocurrency articles in Indonesia will increase by a massive 1,772% in 2021.

Indonesia has the largest Muslim population in the world and has a thriving crypto industry. According to Indonesia’s trade ministry, there were roughly 6.5 million cryptocurrency investors in the country as of May this year, outpacing the 5.7 million retail investors registered with the Indonesia Stock Exchange (IDX).

An announcement was posted on the East Java Nahdlatul Ulama Division website on October 24, citing chairman Kiai Azizi Chasbullah as saying:

“Participants in the bahtsul masail argued that although the government recognizes cryptocurrency as a commodity, it cannot be legalized under Sharia law.”

The group concluded that cryptocurrencies are considered illegal because they involve too much speculation to be used as legitimate investments.

A representative from the Lirboyo Islamic boarding school said: "It was considered illegal based on a number of considerations, including widespread fraud."

Some Muslim scholars believe that cryptocurrencies are similar to gambling, which is prohibited under Islamic religious law. Opinions vary, however, with other Islamic organizations around the world saying that Sharia law allows cryptocurrencies.

Last year, Malaysian authorities, which oversee compliance with Sharia law in the financial sector, announced that it would allow digital asset trading.

Australia is also currently working to build the world's first Sharia-guided decentralized finance (DeFi) platform to navigate between the advantages of DeFi and the beliefs of Islamic finance.

In September, Indonesian trade minister Muhammad Luthfi told local media that Indonesia did not plan to follow China in imposing a ban on cryptocurrency trading and mining.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.