Are cryptocurrencies such as bitcoin lawful to be used according to Islamic law?
DAFTAR ISI
INTISARI JAWABAN
There are several different opinions regarding the lawful or unlawful use of cryptocurrencies among scholars and economists. In Indonesia, the Indonesian Ulema Council (Majelis Ulama Indonesia/ “MUI”) has issued a fatwa, which explains that the use of cryptocurrency as a currency is unlawful. Meanwhile, the use of cryptocurrency as commodity assets may or may not be legally traded, for it depends on the characteristics of the cryptocurrencies, whether they meet sharia requirements or not.
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What is Cryptocurrency?
The European Central Bank classifies cryptocurrencies as a subset of virtual currencies, and defines them as unregulated digital currencies, usually issued and controlled by their developers, and used as well as received among the members of certain virtual communities.[1]
Meanwhile, according to Ferry Mulyanto, cryptocurrencies are digital currencies that use cryptography technology as security and are difficult to forge and where transactions can be carried out or must be carried out online. In addition, for each data transaction, encryption will be carried out using certain cryptographic algorithms.[2]
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The difference between cryptocurrencies from existing currencies is that they are not issued by central authorities, nor are there any interference or control by the government. Initially, cryptocurrencies were not seen as exchange rates that could represent existing digital currencies. However, due to rapid development, cryptocurrencies are immediately known by many people.[3] Hence, what are the laws for cryptocurrency?
Cryptocurrency According to Islamic Law
Are crypto assets lawful? There are different opinions regarding the law of cryptocurrencies from the perspective of Islamic law. There are some scholars or Ulama who consider that the use of cryptocurrencies is lawful, but some forbid it.
Among those who argue that cryptocurrencies are unlawful are Shaykh Shawki Allam the Grand Mufti of Egypt, the Government of Turkey, and Shaykh Haitam of the UK. Meanwhile, among those who argue that cryptocurrencies are basically lawful is the Darul Uloom Zakariyya Fatwa Center in South Africa.[4]
In Indonesia, the opinion held by the Indonesian Ulema Council (Majelis Ulama Indonesia/ “MUI”), as elaborated in United States Regulators are Confused About Cryptocurrency, What About Indonesia?, is stipulated in fatwa of Commission B on Contemporary Jurisprudence Matters Team for Ijtima Ulama Fatwa Commission Indonesia VII 2021. According to this fatwa, cryptocurrency is defined as virtual currency or virtual money.
According to the same reference, the MUI acknowledges that in relation to the legality of the use of cryptocurrencies as well as the law of its use in business transactions according to Islamic law, there are for and against (khilafiyah) among economic experts and ulama.
The detailed explanation of the results of the MUI discussion on cryptocurrency law are:[5]
The use of cryptocurrencies as a legal currency is unlawful. Why is crypto illegal? Because it contains gharar, dharar and it is contrary to Law 7/2011 and Regulation of BI 17/2015.
Cryptocurrency as a commodity/digital asset is not legal to be traded because it contains gharar, dharar, qimar and does not meet the requirements of sil'ah (commodity asset) in sharia, namely: there is a physical form, valuable, the amount is known with certainty, considered as property rights and could be handed over to the buyer.
Cryptocurrencies as a commodity/assets that meet the requirements as a sil'ah, have an underlying asset and obvious benefits are legal to be traded.
In conclusion, there are differences as to whether the use of bitcoin is lawful or unlawful among scholars and economists. In Indonesia, the MUI has issued a fatwa which clarifies that the use of cryptocurrencies as currency is unlawful, while as a commodity asset it may or may not be legally traded depending on the characteristics of the cryptocurrency, as well as whether it meets the sharia requirements or not.
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These are the answers we can provide, we hope you will find it useful.
Haruli Dwicaksana and Pujiyono, Akibat Hukum yang Ditimbulkan Mengenai Cryptocurrency Sebagai Alat Pembayaran di Indonesia, Jurnal Privat Law, Vol. VIII No. 2, July-December 2020;
Mufti Muhammad Abu-Bakar, Shariah Analysis of Bitcoin, Cryptocurrency, & Blockchain, Blossom Labs, Inc., 2018
Robby Houben and Alexander Snyers, Cryptocurrencies and Blockchain, Legal Context and Implications for Financial Crime, Money Laundering and Tax Evasion, European Union, 2018;
[1] Robby Houben and Alexander Snyers, Cryptocurrencies and Blockchain, Legal Context and Implications for Financial Crime, Money Laundering and Tax Evasion, European Union, 2018, p. 20.
[2] Haruli Dwicaksana and Pujiyono, Akibat Hukum yang Ditimbulkan Mengenai Cryptocurrency Sebagai Alat Pembayaran di Indonesia, Jurnal Privat Law, Vol. VIII No. 2, July-December 2020, p. 188.
[3] Haruli Dwicaksana and Pujiyono, Akibat Hukum yang Ditimbulkan Mengenai Cryptocurrency Sebagai Alat Pembayaran di Indonesia, Jurnal Privat Law, Vol. VIII No. 2, July-December 2020, p. 188.
[4] Mufti Muhammad Abu-Bakar, Shariah Analysis of Bitcoin, Cryptocurrency, & Blockchain, Blossom Labs, Inc., 2018, pp. 15 – 16.
