Is Crypto Haram or Halal in Indonesia? Muhammadiyah’s New Fatwa Explained - Indonesia Crypto Network

Muhammadiyah, one of Indonesia’s largest Islamic organizations, has issued a new religious ruling (fatwa) regarding the status of cryptocurrency under Islamic law. In a document released by the Muhammadiyah Central Leadership’s Tarjih and Tajdid Council, cryptocurrency is generally considered permissible as an investment asset. However, many activities within the crypto ecosystem are viewed as incompatible with sharia principles.

A fatwa is an official opinion or explanation on Islamic law issued by religious scholars or authorized institutions. Its purpose is to address issues arising in society based on interpretations of the Quran and Hadith. In general, a fatwa does not carry legal force under state law unless it is formally incorporated into government regulations.

In the document, Muhammadiyah explains that cryptocurrency can be classified as property (māl mutaqawwam). This means the asset is recognized as having economic value, can be owned, stored, and utilized by society.

For this reason, the basic ruling for crypto transactions is considered mubah (permissible), as long as they do not violate sharia principles. However, this permissibility is conditional. If the asset or the transaction mechanism contains elements of interest (riba), fraud, gambling, or excessive speculation, it may become prohibited.

Below is a breakdown of crypto activities that Muhammadiyah considers permissible and those that are not.

Permissible Crypto Activities

According to the fatwa, cryptocurrency can be recognized as legitimate property as long as it has clear economic value and practical utility. Therefore, several activities within the crypto ecosystem remain permissible if they comply with sharia principles.

Examples of permitted activities include:

Investing in cryptocurrencies through the spot market, where assets are exchanged directly and ownership is transferred immediately.
Using cryptocurrency as a store of value based on cryptographic technology.
Utility tokens that provide real functions within a blockchain ecosystem.
Governance tokens that grant participation rights in the governance of a project.
Crypto airdrops, as long as they are not linked to activities that violate Islamic principles such as promoting gambling or fraud.

“A crypto asset has utility that is desired by the public, can be stored in a digital wallet, and has socially recognized economic value (‘urf). Therefore, it qualifies as māl mutaqawwam. Based on this status as a legitimate commodity asset, the default ruling for trading and investing in crypto is permissible,” Muhammadiyah explained.

Prohibited Crypto Activities

On the other hand, Muhammadiyah considers many modern crypto trading mechanisms incompatible with Islamic financial principles.

Practices considered prohibited in the fatwa include:

Futures trading, because transactions involve contracts on future prices without an actual transfer of assets.
Leverage or margin trading, since it involves interest-based borrowing, which falls under riba.
Short selling, because it involves selling assets that are not yet owned or obtained through interest-based loans.
Meme coins or tokens with no clear utility, as they are viewed as purely speculative.
Crypto lending with fixed returns, which is categorized as profit-generating loans (riba).
Market manipulation practices such as pump-and-dump schemes that harm other investors.

Cryptocurrency Cannot Be Used as a Means of Payment

In addition to investment and trading issues, Muhammadiyah’s fatwa also states that cryptocurrency should not be used as a form of currency.

There are several reasons behind this decision. One of the main concerns is the high price volatility of cryptocurrencies, which makes them unstable as a unit of value. Additionally, the limited supply of certain cryptocurrencies may hinder economic circulation.

Indonesia’s regulations also recognize the rupiah as the country’s only legal means of payment under Law No. 7 of 2011 on Currency. As a result, using cryptocurrency as a payment instrument is considered inconsistent with both sharia principles and Indonesia’s legal framework.

However, the Indonesian government does recognize and legalize cryptocurrency as an investment asset and digital commodity under Law No. 4 of 2023 on Financial Sector Development and Strengthening (P2SK Law). Under this framework, crypto falls within the category of Financial Sector Technology Innovation and is supervised by the Financial Services Authority (OJK).

Overall, Muhammadiyah does not declare cryptocurrency entirely forbidden. Crypto assets themselves are generally allowed to be owned and traded.

As the discussion around cryptocurrency and Islamic finance continues to evolve, understanding local perspectives becomes increasingly important. In Indonesia, where religion, regulation, and technology intersect, community trust and credible education play a crucial role in shaping how crypto is adopted.

Indonesia Crypto Network (ICN) helps global crypto projects navigate this landscape by connecting them with trusted communities, industry stakeholders, and local insights. Through structured collaboration and credible engagement, ICN enables projects to communicate their value while respecting the cultural and regulatory context of the Indonesian market.

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