Major Indonesian Islam group has termed cryptocurrency as unlawful

The East Java branch of Nahdlatul Ulama (NU), Indonesia’s most powerful Islamic group, declared cryptocurrency to be unlawful, according to a CNBC report.  According to NU, the inherent volatility of cryptocurrency makes it unsuitable as a genuine investment.

NU is popular in Indonesia and has been described as second to Muhammadiyah, another Islamic public movement. The organization has promoted various initiatives such as education and health services. It has issued fatwas declaring

Even though Bitcoin is considered an asset by the government, it is not treated as such under sharia law, according to Kiai Azizi Chasbullah, the group’s president.

The decision was reached through a “bahtsul masail,” or Javanese discussion, in which members of the NU and representatives from Islamic boarding schools took part. According to certain religious scholers, Bitcoin is comparable to gambling, which is expressly prohibited by religious law.

Indonesia’s trade minister, Muhammad Luthfi, stated that the country’s executive branch would not follow China’s example of prohibiting all Bitcoin transactions.

Cryptocurrency deemed as haram

According to the group, bitcoin was labeled haram since it is excessively speculative and thus cannot be considered a real investment. This decision was influenced by a number of things, including the amount of fraud perpetrated as reported by a member of the organization.

Some Muslims in various countries, on the other hand, believe that cryptocurrencies are halal. This is the case with the UK’s Mufti Muhammad Abu Bakar, who has opined that buying and selling Bitcoin does not constitute gambling. According to him, if a country considers a currency to be legal tender or as a method of payment, it becomes lawful in that region. He is now a scholar, and employed as a mufti at SilkBank Limited.

There are plans in place to create the world’s first Sharia-driven decentralized finance (DeFi) platform in Australia, which will connect users with the benefits of DeFi while still following Islamic finance’s fundamental principles.

Last year, Malaysia’s financial regulatory body that regulates Islamic finance issued a statement indicating that it would allow Bitcoin trading.

Indonesia a Cryptocurrency hub

With the largest muslim population in the world (over 230 million Muslims), Indonesia has the potential to become a cryptocurrency center in the future. This is particularly true because Bitcoin trading and other cryptocurrency-related activities are not prohibited in the country.

Despite the fact that some groups such as NU, refer to cryptocurrency and blockchain as haram (forbidden in Sharia law), Indonesia appears to be receptive to them.

According to the Indonesia Trade Ministry, 6.5 million Bitcoin investors exist in the country. This is outdone by Indonesia’s stock market, which has 5.7 million individual retail investors as of May 2021.

Indonesia was one of the most engaged in terms of crypto content consumption, and it had the second-largest year-over-year Google search growth, as reported by The Coinrise. The NU’s decision to declare Bitcoin as haram might divert attention away from alternative cryptocurrencies and steer investors toward other investment possibilities.