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Cryptocurrencies declared "haram" by Indonesia's largest Islamic organization



The Nahdlatul Ulama (NU) branch in East Java, the largest Islamic organization in the world and Indonesia, has declared cryptocurrencies to be banned or “haram”.

Cointelegraph reports that a discussion held on Sunday on the status of digital coins under Islamic law ended with a fatwa ruling against cryptocurrencies. While a fatwa is authoritative, it is generally considered to be a non-binding opinion given by a qualified legal scholar from the perspective of Islamic law.

Representatives of the NU leadership and various Islamic schools across East Java took part in the discussion called “bahtsul masail”. The debate, which has been described as heated and dynamic, argued that cryptocurrencies could undermine the legality of financial transactions or serve as a tool for fraud.

Indonesia has the largest Muslim population in the world. Over the years, opinions about decentralized digital money have changed among Muslims, Islamic experts and scholars. However, no formal decisions have been made by large organizations such as the Nahdlatul Ulama.

The group stressed that cryptocurrencies are linked to excessive speculation. Other Islamic scholars have compared crypto activities to dishonest work and gambling, which are prohibited under Islamic religious law.

Indonesia's booming crypto industry

This decision surprised many given the growing popularity of cryptocurrencies in Indonesia. Crypto trading has skyrocketed this year, with the number of crypto investors in Indonesia rising to 6.5 million by May, more than retail investors on the Indonesian stock exchange.

Coinformant , an Australian blockchain startup, rated Indonesia with a crypto interest rate of 5.73 out of 10. The country ranked second in the world in the increase in Google searches for crypto keywords, including price of cryptocurrencies and crypto news.

The country also saw a 1772% increase in interest in articles related to cryptocurrencies. Indonesia achieved an overall top spot in the Coinformant ranking. It beat the other countries in a combination of four factors including the increase in interest, article publication on crypto, Google searches, and the number of crypto investors.

The government does not want to ban cryptocurrencies

Recently, the Jakarta government indicated that it would not impose bans on cryptocurrencies. Speaking to local media, Muhamad Lutfi, the country's trade minister, stressed that the government would not follow in China's footsteps.

The Indonesian government will only tighten regulations to ensure that digital assets are not used for illegal activities. Cryptocurrencies like Dogecoin, Ethereum, and Bitcoin are considered goods and assets in Indonesia. Digital coins can be traded, but not used as a means of payment. Australia could be the first country to tread a path between Islamic financial beliefs and decentralized finance by developing a Shari'a-led Decentralized Finance (DeFi) platform.

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