Decision of the Indonesian Ulema Fatwa Commission Ijtima' VII on the Ruling on Cryptocurrency (JURNAL ILMIAH EKONOMI ISLAM)

Summary

• Bitcoin was launched in January 2009 and reached parity with the US dollar in 2011.p.1
• In Indonesia cryptocurrency is not recognised as a currency under Law No. 7 of 2011, but is recognised as a digital asset through BAPPEBTI regulation No. 5 of 2019.p.2
• From a Shariah perspective, cryptocurrency contains elements of gharar (speculation) and qimar (gambling) because of extreme price volatility.p.2
• Using cryptocurrency as a currency is ruled haram because it contains gharar, dharar and conflicts with Indonesian currency law.p.3
• Trading cryptocurrency as a commodity or digital asset is ruled invalid because it contains gharar, dharar and qimar and does not meet the Shariah conditions of a commodity.p.3
• Trading is valid where the asset meets the conditions of a commodity, has an underlying and contains no gharar, dharar or qimar.p.3

Key insights

1. Bitcoin is used as one of the official currencies of El Salvador.p.1
2. Two main views treat cryptocurrency either as money or as a commodity.p.1
3. Cryptocurrency risks cited include threats to national currency sovereignty and exposure to money laundering, and no official regulator or guarantor exists for crypto transactions.p.2
4. The fatwa recommends that the public be careful in transactions.p.3
5. The fatwa recommends that the government create regulation on cryptocurrency to protect the public.p.3
6. The ruling was issued on 11 November 2021 in Jakarta.p.10