‘Fatwa’ Issued Against Bitcoin As Crypto gets Declared Haram in Indonesia

The most recent announcement from the country has brought a lot of questions to mind pertaining to the acceptance of Bitcoin and other cryptocurrencies. If not legally can this become a method of obstruction now?

Indonesia Against Bitcoin?

Tajdid Central Leadership (PP) Muhammadiyah along with the Tarjih Assembly today issued a fatwa against cryptocurrencies. According to the fatwa, the use of Bitcoin and other such coins for investment and payment is considered haram.

The Muhammadiyah Tarjih Assembly stated that “The Tarjih Fatwa stipulates that the legal cryptocurrency is haram both as an investment tool and as a medium of exchange”

The reasons revealed behind the fatwa fall back to the same reasons why regulations on cryptocurrencies are being considered. Albeit these reasons are more religiously motivated than legally. 

As per the Islamic Sharia cryptocurrencies’ speculative nature is a huge shortcoming. The volatility of currencies such as Bitcoin and such makes it haram.

Secondly using such volatile assets is obscure according to the fatwa. Since cryptocurrencies are not backed by any physical asset, it becomes gharar.

Majelis Tarjih and Tajdid PP Muhammadiyah further added that,

“This speculative and gharar nature is forbidden by sharia as the Word of Allah and the Hadith of the Prophet (peace be upon him) and does not meet the values and benchmarks of Business Ethics according to Muhammadiyah, especially these two points, namely: there should be no gharar (HR). Muslim) and there should be no maisir (QS. Al Maidah: 90)”

This is the first time that the objections are arising out of religious stipulations. And although this isn’t an established pattern, many Islam-dominated countries such as Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia previously absolutely banned cryptocurrency.

In fact, most recently, Pakistan’s central bank too proposed a ban on all forms of cryptocurrency citing risks surrounding volatility.

As it is, regulations are already becoming a huge roadblock when it comes to crypto adoption. And the use of crypto might further reduce if such objections come from religious provenance as people are more obedient to religious laws.

Bitcoin’s ‘Volatile’ Nature

Ironically, over the past 2 weeks, Bitcoin hasn’t been volatile at all. The king coin has kept its movement sideways bound and continues to head in that direction. Although at the time of this report it is maintaining a strong green presence having risen by 3.72%, it might remain consolidated for a while.