The East Java branch of Nahdlatul Ulama (NU), the world’s and Indonesia’s largest Islamic organization, has ruled cryptocurrencies as forbidden or ‘haram.’
Cointelegraph reports that a discussion held on Sunday on the status of cryptocurrencies according to Islamic law concluded with a fatwa ruling against crypto. Although authoritative, a fatwa is generally considered a non-binding opinion given from the view of Islamic law by a qualified legal scholar.
The discussion called ‘bahtsul masail’ was attended by representatives of NU leadership and various Islamic boarding schools across East Java. In the debate, described as heated and dynamic, it was argued that Cryptocurrencies could undermine financial transaction legalities or serve as a fraud tool.
Indonesia has the largest population of Muslims worldwide. Throughout the years, opinions about decentralized digital money have varied among ordinary Muslims, Islamic experts, and scholars. However, no formal decisions had been taken by large organizations like the Nahdlatul Ulama.
The group emphasized that cryptocurrencies involve excessive speculation. Other Islamic scholars have compared crypto activities to dishonest work and gambling, a banned practice under Islamic religious law.
Indonesia’s booming crypto industry
The decision by NU’s East Java branch takes many by surprise amid the growing popularity of cryptocurrency in Indonesia. Crypto trade has soared this year, with crypto investors in Indonesia increasing to 6.5 million by May, more than the retail investors in the Indonesia Stock Exchange.
Coinformant, an Australian Blockchain education startup, ranked Indonesia with a 5.73 crypto interest score out of ten. The country ranked second highest globally for increased Google searches of crypto keywords, including cryptocurrency prices, cryptocurrency, and crypto news.
The country also saw a 1772% increase in engagements with crypto articles. Indonesia attained an overall top spot in Coinformant’s rankings. It beat other countries in a combination of four factors, including engagement increases, publication of crypto articles, google searches, and crypto ownership.
Indonesia government not following in China’s footsteps
Recently, the Jakarta government indicated it wouldn’t impose bans on cryptocurrencies. Talking to local media, Muhamad Lutfi, the country’s Trade Minister, emphasized the government wouldn’t follow in China’s footsteps.
The Indonesian government would only tighten regulations to ensure digital assets are not used in illegal activities. Cryptocurrencies like Dogecoin, Ethereum, and Bitcoin are considered commodities and assets in Indonesia. Digital coins can be traded but cannot be used as a means of payment. Australia may be the first to set a path between Islamic finance beliefs and decentralized finance by developing a sharia-guided decentralized finance (DeFi) platform.
