Indonesian Ulema Council: Cryptocurrency is Haram

Nusantara Pol - Indonesian Ulema Council (MUI) issued a Haram Fatwa against cryptocurrency. The council forbids the use of cryptocurrency as currency and it is illegal to trade.

Chairman of the MUI Fatwa Commission, Asrorun Niam Soleh, as quoted from Tempo on Thursday (11/11/2021), said that there are three legal dictums explaining why cryptocurrencies are forbidden as currency.

Niam said the results of the Islamic scholars (Ulema) meeting determined that the use of cryptocurrency as a legal currency is haram because it contains gharar and dharar and is contrary to Law number 7 of 2011 and Bank Indonesia Regulation number 17 of 2015.

Indonesian Ulema Council, Fatwa Commission. (Photo: MUI)

Gharar can be defined as uncertainty, chance, risk deception, or actions aimed at harming others. Dharar  in this context can be defined as transactions that can cause harm or loss, and as a result it may cause a vanity transfer of ownership rights, which only benefits one party.

Furthermore, cryptocurrency as a commodity or digital asset is also illegal to trade because it contains gharar, dharar, qimar.

Qimar is similar to gharar but usually referred in gambling context (gambling is haram in Islam).

"And it does not meet the sil'ah requirements according to sharia, namely there is a physical form, has value, the exact amount is known, property rights, and can be handed over to the buyer," Niam said at a press conference, Thursday, November 11, 2021.

However, for the type of crypto as a commodity or asset that meets the requirements as sil'ah and has an underlying and has clear benefits, said Niam, it is legal to be traded.

Until now, the Indonesian government also does not recognize crypto as a means of payment as an alternative to using rupiah. However, crypto trading is regulated by the Commodity Futures Trading Supervisory Agency (CoFTRA) of the Ministry of Trade in CoFTRA Regulation Number 2 of 2019 concerning the Implementation of the Physical Commodity Market on the Futures Exchange.

The Ijtima Ulama of the MUI Fatwa Commission was held in Jakarta for three days by discussing 17 issues which were divided into three groups.

In addition to regulating crypto law, several things that are discussed in the Ijtima Ulama MUI Fatwa Commission include the criteria for blasphemy, regarding jihad and the caliphate, reviewing taxes, customs and levies. In addition, it is also about elections and local elections, land distribution for equity and welfare, cryptocurrency law, online marriage contract law, and online loan law.
Result of Ijtima Ulama The Fatwa Commission of the Indonesian Ulema Council (MUI) forbids the use of cryptocurrencies or cryptocurrencies as currency and is illegal to trade.

Chairman of the MUI Fatwa Commission Asrorun Niam Soleh in a press conference that was monitored online by the MUI Fatwa Commission in Jakarta, Thursday, said that there were three legal dictums explaining that cryptocurrencies were forbidden as currency.

Niam said the results of the ulema meeting determined that the use of cryptocurrency as a legal currency is haram because it contains gharar and dharar and is contrary to Law number 7 of 2011 and Bank Indonesia Regulation number 17 of 2015.

Furthermore, cryptocurrency as a commodity or digital asset is also illegal to trade because it contains gharar, dharar, qimar.

"And it does not meet the sil'ah requirements according to sharia, namely there is a physical form, has value, the exact amount is known, ownership rights, and can be handed over to the buyer," Niam said at a press conference, Thursday, November 11, 2021.

However, for the type of crypto as a commodity or asset that meets the sil'ah requirements and has an underlying and has clear benefits, said Niam, it is legal to be traded.

The Ijtima Ulama of the MUI Fatwa Commission was held in Jakarta for three days by discussing 17 issues which were divided into three groups.

In addition to regulating crypto law, several things that are discussed in the Ijtima Ulama MUI Fatwa Commission include the criteria for blasphemy, regarding jihad and the caliphate, reviewing taxes, customs and levies. In addition, it is also about elections and local elections, land distribution for equity and welfare, cryptocurrency law, online marriage law, and online loan law. 

Until now, the Indonesian government does not recognize crypto as a means of payment alternative to using rupiah. However, crypto trading is regulated by the Commodity Futures Trading Regulatory Agency (BAPPETI) of the Ministry of Trade in BAPPETI Regulation Number 2 of 2019 concerning the Implementation of the Physical Commodity Market on the Futures Exchange. 

Previously, the Governor of Bank Indonesia Perry Warjiyo also strictly prohibited all financial institutions from using cryptocurrencies. Not only using, financial institutions are also prohibited from facilitating cyptocurrency transaction

"We prohibit all financial institutions, especially those in partnership with BI, from facilitating or using these cryptocurrencies as payments or financial services," he said in a BPK RI webinar on June 15, 2021, as quoted from CNBC Indonesia.