Ground Report | New Delhi: Cryptocurrency is haram in Islam; The crypto market is thriving and booming in Indonesia, but despite this, the East Java branch of the Indonesian Islamic organization Nahdlatul Ulama (NU) considers cryptocurrency haram or “prohibited” under Islamic law (Sharia law).
Cryptocurrency is haram in Islam
Decisions are made through ‘bahtsul masail’ which means deliberation in Javanese in which NU members, as well as representatives of pesantren, are involved in deliberation. The issue of fraud as well as cryptocurrency volatility means it cannot be classed as a legitimate investment which has led to the group banning cryptocurrencies.
Some Muslim academics consider crypto to be similar to gambling, an activity that is prohibited under religious law. Kiai Azizi Chasbullah, chairman of the East Java branch of Nahdlatul Ulama, was quoted in a statement published on their website.
“The participants of the bahtsul masail are of the view that even though the government recognizes cryptocurrency as a commodity, it cannot be legalized under Islamic sharia law,” he said.
world’s largest Muslim population
Indonesia is home to the world’s largest Muslim population and has a thriving crypto industry. According to the Indonesian Ministry of Trade, the country had around 6.5 million crypto investors as of May this year, surpassing the 5.7 million retail investors listed on the Indonesia Stock Exchange (IDX).
The announcement published on the East Java Nahdlatul Ulama website on October 24 quoted chairman Kiai Azizi Chasbullah as saying:
“The participants of bahtsul masail have the view that even though the government recognizes cryptocurrency as a commodity, it cannot be legalized under Islamic sharia law.”
The group came to the conclusion that cryptocurrencies are considered haram because it involves too much speculation, and therefore cannot be used as a legitimate investment.
“Based on several considerations, including the prevalence of fraud, it is considered unlawful,” said a representative from the Lirboyo Islamic Boarding School, Kediri.
Some Muslim scholars believe that cryptocurrencies are similar to gambling, which is prohibited under Islamic religious law. However, opinions vary and other Islamic organizations around the world say that Islamic law allows cryptocurrencies.
Indonesian crypto revival
According to a global study by Coinformant, Indonesia reigns supreme as the world’s crypto hotspot in 2021. Indonesia’s interest in cryptocurrencies has achieved the fastest acceleration overall as it has the second-highest increase of Google searches for crypto-related terms in the last 12 months.
It also had the highest increase in engagement with articles about crypto, showing how much more people are interested in and talking about crypto in Indonesia. It is estimated to have 7.3 million crypto owners and falls in the middle of the country analyzed regarding the percentage of the population that owns crypto, suggesting there is more room for growth.