Tag: sharia law

Indonesian Religious Group Nahdlatul Ulama in East Java tagged crypto as Haram

An Islamic religious organization in Indonesia, one of the countries with the largest population of Muslims in the world, Nahdlatul Ulama in East Java, has issued a fatwa on the status of digital currencies under the Sharia Law.

The organization proscribed cryptocurrencies like Bitcoin (BTC), and Ethereum, tagging them as ‘Haram’, which means forbidden in Islam.

The pronunciation of crypto as Haram came following a meeting dubbed “bahtsul masail” held on Sunday, Oct. 24. As reported by local media, those who participated in the heated and dynamic debate concluded that digital currencies could undermine the legality of financial transactions. The group also draws on the vulnerabilities of digital currencies to be used for committing fraud. 

“Participants of the bahtsul masail formed a view, despite crypto already being acknowledged by the government as a commodity, that it cannot be legalized under the [Islamic sharia],” said Kiai Azizi Chasbullah, one of the spearheads in the discussion. The group broadly maintained the position that digital currencies cannot be legalized under Sharia law.

The discussions of how to classify digital currencies remain a polarizing concept in religious sectors today. While Islam is known to be against undue financial gains or profiteering, several Islamic bodies have tapped on the capabilities of blockchain technology to develop innovative solutions to existing financial challenges.

From Bangladesh with a sizeable Muslim population riding on the blockchain bandwagon ahead of the proposed 4th Industrial Revolution to Algorand blockchain certified for Sharia Compliant Financing, Islam has proven to benefit in more ways than one on the blockchain technology powering cryptocurrencies.

Digital currencies remain a viable tool for Islamic nations like Iran to evade financial sanctions imposed by the United States and the Financial Action Task Force (FATF). While the position of the bahtsul masail was held dearly by the group, there is notable dissent even amongst Islamic scholars on the subject.

Indonesian Scholarly Body Majelis Ulama Indonesia (MUI) Says Crypto as Commodity or Digital Asset is Haram

Indonesia’s most acclaimed Islamic scholarly body, the Majelis Ulama Indonesia (MUI) has spoken against the engagement with digital currencies for Muslims in the country as it says the nascent asset class is haram, a similar position held by a smaller religious group as reported by Blockchain.news.

According to CNBC Indonesia, the Majelis Ulama Indonesia came up with this verdict after the Ijtima Ulama consultative forum, with the MUI Chairman, Asrorun Niam Soleh, noting that the decision was taken for a number of reasons.

“From the deliberations that have been determined there are three legal dictums, the first is the use of cryptocurrency as a legal currency is haram because it is gharar, dharar, and contrary to Law Number 7 of 2019 and BI Regulation Number 17 of 2015,” said Asrorun in the Ijtima Ulama forum. 

Under the provisions of Islamic finance and within the context of digital currencies, “gharar,” “dharar,” and “qimar” imply that cryptocurrencies are susceptible to a high level of risk, harm, and speculations, all of which have no roots under the Sharia law. 

Adding to the number of reasons why cryptocurrencies are not permissible for Muslim faithful, Asrorun said digital assets do not have a physical backing, and have no real value, making it not an ideal candidate to meet the syar’i sil’ah requirements. Despite the positions of the MUI, the body still acknowledges the legality of digital currencies as assets that can be traded as commodities. This new positioning reflects its values in which it is not enforcing its stance on its members nationwide.

Nonetheless, the Ulema Council’s proscription of digital currencies may reshape the mindsets of some Indonesians who follow religious enactment to the letter. Indonesia is home to more than 250 million Muslims, some of whom may steer clear of investing in cryptocurrencies moving forward. With the country known as a very favorable hub for crypto activities with 1 in 9 citizens holding digital assets, the MUI proscription can impact this growth negatively.

The stance of the MUI is however not a global inclination of Islam toward digital assets as there are Muslim entities who sanctions and takes donations in cryptocurrencies.

Image source: mui.or.id

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