‘Fatwa’ Issued Against Bitcoin as Crypto Declared Haram in Indonesia

The most recent announcement of the country has raised many questions regarding the acceptance of Bitcoin and other cryptocurrencies. If not legally, can it become a method of obstruction now?

Indonesia against Bitcoin?

Tajdid Central Leadership (PP) Muhammadiyah and Tarjih Assembly today issued a fatwa against cryptocurrencies. According to the fatwa, the use of Bitcoin and other such coins for investment and payment purposes is considered haraam.

The Muhammadiyah Tarjih Assembly stated that “The Tarjih Fatwa states that legal cryptocurrency is haraam both as an investment tool and as a medium of exchange”

The reasons revealed behind the fatwa go back to the same reasons why cryptocurrency regulation is being considered. Although these reasons are motivated more by religion than by law.

According to Islamic Sharia, the speculative nature of cryptocurrencies is a huge loophole. The volatility of currencies such as Bitcoin and others makes it haram.

Second, the use of these volatile assets is obscure according to the fatwa. Since cryptocurrencies are not backed by any physical asset, it becomes gharar.

Majelis Tarjih and Tajdid PP Muhammadiyah further added that,

“This speculation and gharar nature is prohibited by Sharia like the Word of Allah and the Hadith of the Prophet (peace be upon him) and does not respect the values ​​and benchmarks of business ethics according to Muhammadiyah, especially these two points, namely : there should be no gharar (TIME). Muslim) and there should be no maisir (QS. Al Maidah: 90)”

This is the first time that the objections stem from religious stipulations. And although it is not an established pattern, many Islamic-dominated countries such as Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia have previously banned absolutely cryptocurrency.

In fact, most recently, the central bank of Pakistan has also proposed a ban on all forms of cryptocurrency citing volatility risks.

As things stand, regulations are already becoming a huge barrier to crypto adoption. And the use of crypto could decline further if such objections come from a religious provenance, as people are more obedient to religious laws.

The “volatile” nature of Bitcoin

Ironically, over the past 2 weeks Bitcoin has not been volatile at all. The king’s piece has maintained its sideways movement and continues to move in that direction. Although at the time of this report it maintains a strong green presence having increased by 3.72%, it could remain consolidated for some time.

Bitcoin remains in consolidation – Source: FXEMPIRE

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