Muhammadiyah Allows Crypto Investment, Not Considered Official Money
Muhammadiyah Fatwa on Crypto Investment
The Tarjih Council and the Muhammadiyah Central Executive Tajdid (PP) have issued a fatwa related to crypto investment. This fatwa emerged in response to the transformation of the global economy that shifted from physical to digital systems. In the process, blockchain-based crypto assets have become an important part of macroeconomic reality.
With the global market capitalization reaching trillions of dollars, this phenomenon is no longer considered a small speculative commodity. In Indonesia itself, crypto adoption has increased drastically to reach 20.16 million investors in the first half of 2024. This makes the Tarjih Council and Tajdid PP Muhammadiyah feel the need to immediately provide legal certainty to respond to the dynamics of digital finance for the benefit of the community.
Conceptually, crypto assets can be likened to a valuable commodity whose form is purely digital. This asset does not have a physical form such as metal coins or banknotes, but in the form of data codes that are locked with a secret math code.
According to the fatwa issued by the Tarjih Council and Tajdid PP Muhammadiyah, crypto assets meet the criteria in the existing definitions because they have utility (benefits) that the community wants, can be stored in a digital wallet, and has a socially recognized economic value (‘urf). Therefore, his position is valid as Māl Mutaqawwam. Based on this, the law of origin transacting and investing in crypto is permissible.
This record of ownership and transfer of digital assets is recorded simultaneously and transparently in thousands of computers around the world. This joint cash book system makes the transaction of crypto assets can be carried out directly from the sender to the recipient without the need for a traditional intermediary (such as a bank), while ensuring that the asset is relatively safe and very difficult to fake or double-spending, as long as the protocol and the private key remain safe.
In Indonesian positive law, the use of crypto as a means of payment is absolutely prohibited based on Law (UU) no. 7 of 2011 concerning the currency that stipulates the Rupiah as the only legal tender.
However, the state recognizes and legalizes crypto as an investment asset and a digital commodity through Law no. 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK), which places it as part of the Financial Sector Technology Innovation (ITSK) under the supervision of the Financial Services Authority (OJK), as well as the Regulation of the Commodity Futures Trading Supervisory Agency (BAPPEBTI) No. 8 of 2021 which provides formal legality in physical market trading.
Meanwhile, to be recognized as legal as full currency (nuqd), crypto fails to meet the main requirements. There are three major obstacles that make it unfit to be a currency due to the factors of extreme volatility, limited supply, and state sovereignty and malaah ammah.
