The Fatwa Unveiled
The Tarjih Council and the Central Executive Tajdid of Muhammadiyah, one of Indonesia’s colossal non-government Islamic organizations, has sent waves through the fintech world with their recent ruling against cryptocurrency, deeming it haram, or unlawful. Issued just last Tuesday, this fatwa is raising eyebrows and wallets alike among Muslims considering crypto investments.
What’s the Gharar Problem?
One of the pivotal issues highlighted in the fatwa is the speculative nature of cryptocurrencies. It’s like tossing your money into a wishing well and hoping a genie will grant your financial dreams. This speculative gambling, laden with gharar (or obscurity), means that crypto tokens don’t have any intrinsic backing—nothing solid like gold. You might as well be investing in pixie dust!
Cryptos as Currency? Not Quite!
Moving beyond the investment angle, the fatwa pointed out that cryptocurrencies don’t meet the Islamic standards necessary to be considered a legitimate medium of exchange. For a currency to be acceptable, it must be legal tender that is widely recognized and accepted. So unless you try to buy a bottle of water with Bitcoin at your local shop (spoiler alert: it probably won’t work), you might want to rethink your options.
The Commandments of Business Ethics
The fatwa reads: “This speculative nature and gharar are forbidden by the Shari’a as the word of God and the hadith of the Prophet SAW and do not meet the values and benchmarks of Business Ethics according to Muhammadiyah.” Essentially, the rules of the Islamic game have been set, and cryptocurrencies are warming the bench.
A Growing Trend in Crypto Adoption
Now, before you start thinking that this fatwa is putting a definitive end to crypto in Indonesia, you’d be wrong. Even with the rising calls to ban cryptocurrencies from Islamic organizations, Indonesia saw a whopping $9.8 billion in crypto transactions in 2021—a 1,222% increase compared to the previous year! Clearly, the allure of digital currency is a hard beast to tame, regardless of divine guidelines. So, crypto might be haram according to some, but for many, it still represents a lavish pathway to wealth.
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