Islamic organization in Indonesia declares digital currencies haram

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A regional branch of the world’s largest Islamic organization in Indonesia has declared digital currencies “haram,” meaning they are prohibited by Islamic religious law. The group held a heated debate in which digital currency experts and religious scholars opposed a final vote against allowing digital currencies.

For years, the debate over the legality of digital currencies under Islamic Sharia law has continued, without definitive direction. A local branch of the Nahdlatul Ulama, an Islamic religious organization, ultimately ruled against them. The branch of Indonesia’s mountainous East Java province said the digital currencies haram at a meeting on October 24, local media reported.

Nahdlatul Ulama is a religious organization based in Indonesia with an estimated membership of 90 million. This makes it the largest Islamic organization in the world and therefore very influential both in Indonesia and in other Muslim countries.

According to at the local Tempo outlet, the organization recently hosted a discussion on digital currencies. The members concluded that digital currencies were against Islamic principles after listening to an expert explain how they work.

Among the factors disputed by members was the use of digital currencies for the purpose of fraud. They also concluded that digital currencies do not offer any advantage from a sharia point of view.

On the organization’s East Java faction website, the group wrote: “Bahtsul Masail participants felt that although crypto is already recognized by the government as a commodity, it cannot be legalized. under the law. [Islamic sharia]. “

Nahdlatul Ulama is the most influential Islamic group to voice their opinion on digital currencies. However, this is not the first time that the application of Sharia law to digital currencies has been discussed. There have been Islamic scholars who believe that digital currency is haram and goes against religious ethics, and those who see it as inherently good, but sometimes applied in illegal transactions.

One of those in the second group is Mufti Muhammad Abu-Bakar, a former Sharia advisor for Blossom Finance. In his report, he argued that BTC should be described as halal simply because of its volatile and speculative nature. All currencies are speculative in nature, including those issued by central banks.

He further refuted the argument that digital currencies are used for illegal purposes and therefore are haram.

“In general terms, using something lawful for illegal purposes does not make the thing itself illegal,” he wrote.

Mufti Faraz Adam, a UK-based Islamic fintech consultant, shares the same belief. In a 2019 podcast, he declared, “It’s fair, it’s fair, it’s transparent, it’s atomized, it’s not monopolized. Then, I do not see why the Sharia would prohibit this system.

Nahdlatul Ulama’s latest statement comes at a time when the adoption of digital currency in Indonesia is skyrocketing. According to the latest data from Coinformant, Indonesia tops the global rankings for digital currency interest, peaking at 1,770% engagement and increasing Google search volume by 600%.

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