Indonesia’s Tarjih Council and the Central Executive Tajdid of Muhammadiyah have issued a fatwa (decree) stipulating the illegality of cryptocurrency use or investment by the country’s Muslims. It cites both the uncertainty and the absence of government backing as reasons Muslims shouldn’t invest in or use cryptocurrencies.
Cryptocurrencies Considered Too Volatil
A fatwa has been issued by the Central Executive Tajdid Muhammadiyah and Tarjih Council, an Indonesian Islamic organisation against cryptocurrency use in Asia. This fatwa comes just a few months following another Islamic organisation that discouraged cryptocurrency use. It explains to Muslims both the legality and the dangers of cryptocurrency.
“Tarjih’s fatwa stipulates that cryptocurrency is illegal both as an investment tool and as a medium of exchange,” a statement on the Islamic organization’s website explained.
CNBC Indonesia reports that one of the main reasons the Islamic organisation issued the fatwa was due to cryptocurrency volatility. The organization argues that since cryptocurrencies like bitcoin are not backed by an asset and are thought to be obscure, they are therefore not lawful for use by Indonesia’s Muslims.
Consumer Protection
In addition to citing concerns about the volatile nature of cryptocurrencies, the Tarjih Assembly’s fatwa explains why digital assets such as bitcoin do not fully satisfy the conditions needed for them to be regarded as a medium of exchange. The organization’s fatwa notes:
Our country hasn’t legalized bitcoin exchange. There is no authority that can regulate it. We also need to talk about protecting consumers using bitcoin.
The Tarjih Assembly’s fatwa is the latest move by an Indonesian Islamic organization opposing cryptocurrencies after another one, the National Ulema Council (MUI), banned them in November 2021. MUI explained the ban in a similar manner, pointing out the damage that crypto assets can cause as well as the uncertainty.
Although the decrees by Islamic organizations are not legally binding, they can still deter Indonesia’s mainly Muslim population from investing in or using digital assets.
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