The East Java division of one of the largest Islamic organizations in Indonesia, Nahdlatul Ulama (NU), has issued a fatwa in which it considers that the use of cryptocurrencies is “haram” or is prohibited under Islamic law.
A fatwa is a non-binding legal opinion on Islamic law, reached through a debate called bahtsul masail. To bahtsul masail Representatives from the management of the Nahdlatul Ulama branch and from various Islamic boarding schools in East Java attended.
Interest in cryptocurrencies has increased in Indonesia over the past year. Earlier this month, a Coinformant report reported that Indonesia saw a massive 1,772% increase in the number of people who were interested in articles about cryptocurrencies during 2021.
Indonesia is home to the largest Muslim population in the world and has a booming cryptocurrency industry. According to the Indonesian Ministry of Commerce, The nation had gained around 6.5 million crypto investors as of May this year, dwarfing the 5.7 million retail investors registered on the Indonesian Stock Exchange.
An announcement posted on the website of the East Java division of Nahdlatul Ulama on Sunday quotes President Kiai Azizi Chasbullah as saying:
“Bahtsul Masai participants are of the opinion that although the government recognizes cryptocurrencies as a commodity, it cannot be legalized under Islamic sharia law.”
The group concluded that Cryptocurrencies were considered haram because they involve too much speculation, and therefore cannot be used as a legitimate investment.
“Based on various considerations, including the prevalence of fraud, it is considered illegal.”said a representative of the Islamic boarding school Lirboyo Kediri.
Some Muslim scholars believe that cryptocurrencies are similar to gambling, which is prohibited by Islamic religious law. Nevertheless, Opinions vary, and other Islamic organizations around the world say that Islamic law allows cryptocurrencies.
Last year, The Malaysian authority that oversees compliance with Islamic law in finance announced that it would allow trading of digital assets.
Efforts are also underway in Australia to build the world’s first decentralized financial platform (DeFi) guided by sharia to navigate between the advantages of DeFi and the beliefs of Islamic finance.
In September, Indonesian Commerce Minister Muhammad Lutfi told local media that Indonesia had no plans to follow in China’s footsteps and impose a ban on cryptocurrency trading, mining or trading.
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