The Sharia Stance on Digital Asset Dealings.
Recently, the Indonesian Ulema Council (MUI) issued a fatwa regarding the ban on using cryptocurrencies as a currency. The fatwa also prohibits the use of cryptocurrencies in day-to-day transactions as they are not recognized in trade and investment in Islam. This gazetting provoked various reactions among industry players and investors were no less cynical in the international arena.
In the commentary on the fatwa, it was explained that the argument regarding the ban was due to the existence of elements of gharar (uncertainty), dharar (wagering and harm), dubious value, potential exposure to gambling activities, and not in line with the provisions of the country’s financial authorities. Therefore, it is banned.
We do not doubt the decision to ban cryptocurrency because it is indeed not a currency. In addition, there are laws governing money transfer and trade settlement guidelines and it is controlled by the central bank. A fatwa is not necessary for this situation because the relevant financial laws have existed and are enforced by almost all countries to ensure the stability of the value of their respective currencies. We may only need Sharia guidelines in dealing with digital assets. We should think of how to position a fatwa to a higher level instead of lowering it with an unnecessary gazette.
One needs to understand that fatwas are decided commonly based on information provided by experts. If the information leads to a conclusion such as gharar (uncertainty) then the Sharia position on it is not allowed. Those who tried to dispute the fatwa on the ground that ‘gharar’ and ‘dharar’ in this case stems from ‘not knowing’, therefore if one knows in detail about this digital asset, then there is no issue for both. Response to the dubious value due to lack of physical element cannot be accepted as it is very subjective and can be of value, such as a reputation and goodwill of a company. Of course one cannot see a database, software, block chain, a bit of algorithm or programming in a computer physically. The value is perceived by parties interested in it. However, Islam still puts some condition for an item that contains the element of khabith (excretion). Other than the nature of the thing is permissible, the deed involving the acquirement of the item/asset does not involve batil (void and fraud), zulm (oppressive), cheat, and coercion. Furthermore, in acquiring digital assets involving financial/monetary deals, KYC (Know Your Customer) is imposed by monetary authorities around the world to protect anonymity.
In Malaysia, the discussion of fiqh issues on cryptocurrencies is not new. The first expert consultation was held by the Institute of Islamic Understanding Malaysia (IKIM) in February 2018. Resulting from the event, IKIM published a book in Malay entitled “Islam dan Mata Wang Kripto” and is available for sale on the digital marketplace such as Shopee or e-Sentral. The Sharia stance on cryptocurrency at an early stage categorizes it as non -currency (refer to the notes of the Federal Territory Shariah Law Consultative Meeting dated November 2018). The Perlis Islamic Religious and Malay Customs Council consider that digital assets such as Bitcoin pose a certain value and should be traded in a permissible manner (decision of the meeting on 6 December 2018).
However, this digital currency is not guaranteed by Bank Negara and is placed under the regulation of laws related to money laundering (Digital Currencies (Sector 6) Anti-money Laundering Act AML/CFT). In addition, the Securities Commission also issued guidelines related to the issuance of digital assets that must be complied with so that it meets legal requirements and guarantees the interests of the people. Furthermore, monitoring the country’s financial activities has always been a priority to ensure the stability of the country’s currency, including the development of digital trading platforms, scams, crime, and online gambling. There is an exhausting list of entities operating without licenses being listed and openly available to be referred.
The world is witnessing the growth of digitization in almost all industries. Ranging from government services, education, to small and medium enterprise industries that rely on digital applications in retail, marketing, and payments. Support sectors such as finance, technology, legal, transportation, services are forced to readily accept this evolution moving from traditional systems to digital. Indeed, digital systems have many benefits in smoothing socio-economic growth. Along with this is the Sharia aspect that needs to be adapted to the current developments to remain significant.
There are various Sharia challenges to this digital development. Other important Sharia issues on digital technology that need serious attention are for example a right and legal obligation on damage or loss of life caused by autonomous driving, underlying permissible contract for digital wallet, the status of selling unowned thing via dropship, guidelines, and rating for the gaming industry (in term of violence, abusive language and, criminal mimicking), the status of digital ETF (exchange-traded funds), and many more.
Sharia is not just about haram or halal but to look far and wide to the implications of the current activities towards people and community and the fate of the Hereafter based on the teachings of Islam. Since the main goal of Sharia is to bring benefits to human beings, then the possible threat of harm should be one of the final assessments of a decision.
