The Tarjih Council and the Central Executive Tajdid of Muhammadiyah, one of Indonesia’s major non-government Islamic groups, have issued a new fatwa prohibiting Muslims from using cryptocurrencies, calling them haram (illegal).
The fatwa, or Islamic legal opinion, was issued on Tuesday, and it highlighted two key faults with cryptocurrencies that render them unlawful as an investment instrument and a medium of exchange under Islamic law.
Muhammadiyah is the third Islamic group in Indonesia to issue a fatwa against the use of bitcoin. Previously, the Indonesian Ulema Council (MUI), the country’s top clerical organisation, deemed crypto haram as a transactional instrument in November 2021. It did say, though, that crypto assets can be used as an investment instrument if they follow sharia principles. Another important Islamic body, the Nahdlatul Ulama (NU), declared crypto haram in October 2021 because of its speculative character.
Despite mounting requests from Islamic organisations in Indonesia to prohibit the use of cryptocurrency, the country has experienced a massive increase in popularity. In 2021, the country had USD 9.8 billion in cryptocurrency transactions, an increase of 1,222 percent over the previous year. Not just for investments and transactions, but also as a trading commodity, crypto has become the preferred currency of many worldwide crypto exchanges.
