The Future For Halal Crypto-Assets

Indonesia’s recent announcement casts new light on the future of crypto-assets for Muslims.

An announcement this month within Indonesia has been interpreted to state that cryptocurrencies are viewed as Haram or forbidden for Muslims within the world’s largest Islamic country. However, the truth is more finely nuanced. Understanding what is acceptable and what is forbidden is becoming increasingly important for Muslims who wish to engage in the booming crypto-asset markets.

Exactly how Muslims can engage with blockchain products is based upon the inherent value contained within those crypto-assets. In this article, we break down the difference and identify how Muslims can safely engage with crypto-assets in a Halal manner.

According to, Indonesia’s Ulema Council reportedly declared the use of crypto as a currency to be Haram or forbidden for Muslims. The article quoted the head of Indonesia’s religious decrees Asrorun Niam Sholeh, explaining that the council held an expert hearing and proclaimed that cryptocurrency has elements of “uncertainty, wagering, and harm”.

Using this definition to define cryptocurrencies as Haram is in line with Islamic teachings. The Quran specifically forbids Muslims from engaging in gambling. In Surat Al-Mā’idah 5:90–5:91 it states:

O you who have believed, indeed, intoxicants, gambling, [sacrificing on] stone alters [to other than Allah], and divining arrows are but defilement from the work of Satan, so avoid it that you may be successful. Satan only wants to cause between you animosity and hatred through intoxicants and gambling and to avert you from the remembrance of Allah and from prayer. So will you not desist?

In this Surah, the Quran entreats believers of Islam to abstain from gambling to ensure they are successful in life and avoid hatred which would avert them from prayer and their connection with Allah. The Quran expresses that gambling is a waste of time and money and contrary to Islamic teachings that advise Muslims to use time and money wisely.

Gambling Creates Harm

When we investigate the impacts of gambling within global societies, it is clear that gambling creates serious problems for individuals and societies. Gambling allows financial entities to prey upon individuals who are suffering from the traits of addiction. The physical reaction to gambling releases dopamine in the human brain and acts as a form of intoxication, to which people can become addicted.

As an example, Indonesia’s neighbour Australia is currently experiencing a gambling addiction epidemic. It is estimated that over 80% of Australians engage with gambling and over 300,000 people in Australia are addicted to gambling. This is over 1.6% of the population and makes Australia the most gambling-addicted country in the world.

The Quran has correctly identified the dangers of gambling and the adverse impacts on individuals and society it can cause. Because of their uncertainty, certain crypto-assets can be considered as holding many characteristics of gambling. For this reason, it was correct for Indonesia’s Islamic scholars to identify some cryptocurrencies as being characterized by “uncertainty, wagering, and harm”.

The Two Kinds Of Halal Crypto-Assets

The statement by Indonesia’s Ulema Council was not legally binding but caused Indonesian Muslims to reconsider their interaction with cryptocurrencies. Legally, the Indonesian government has indicated that the country will not impose an outright ban on cryptocurrency as China has done.

Indonesia is currently the country with the largest global surge in cryptocurrency interest. A recent report by Coinformant identified Indonesia as having witnessed a 1,772% increase in the number of people engaging with articles about cryptocurrency year-over-year.

In their statement, Indonesia’s Ulema Council noted that if crypto-assets can abide by Shari’ah tenets and exhibit a clear benefit, they can be considered Halal and traded.

There are two ways that crypto-assets can demonstrate a clear benefit to qualify as Halal for Islamic investments.

  1. Utility — crypto assets that provide a clear utility either directly for investors or natively within an ecosystem.
  2. Value — if a crypto asset represents an underlying value such as a commodity or land. These assets are currently represented by paper share certificates and in the blockchain sector, these are often classified as Security Tokens.

These two core values provide opportunities for crypto-assets to be Shari’ah-compliant and considered Halal.

In Indonesia, crypto-assets are allowed to trade under the same legislation as commodity futures but cannot be used as a currency. It is rumoured that the Indonesian government has goals to set up its own crypto exchange. Like many other countries, Indonesia’s central bank, Bank Indonesia has been exploring a central bank digital currency (CBDC).

There are a number of opportunities for Indonesians to capitalize on the benefits of crypto-assets in a Shari’ah-compliant manner. In a future article, we will delve into the ways in which Halal crypto-assets can bring value and utility to investors within Indonesia.

The Arah SuperApp will deliver a suite of Halal products and services that includes communications, financial services, crypto-assets, blockchain services and gaming. Arah has developed strategic relationships with the world’s largest Islamic community Nahdlatul Ulama which represents over 117 million members and Indonesia’s Halal certification body Majelis Ulama.

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