Islamic scholar in Indonesia says Bitcoin is compatible with Islamic law.
While investors and financial institutions are increasingly speculating on blockchain and cryptocurrencies, the world of Islamic finance has, so far, remained relatively confused as to what to do with these new products.
To decide whether digital currencies should be considered ‘halal’ (permissible) or ‘haram’ (forbidden), Mufti Muhammad Abu Bakar, Indonesian scholar and head of Shariah Compliance at Indonesian fintech start-up Blossom Finance, carried out a study whose results he published last April.
“Bitcoin is permissible in principal, as it is treated as valuable by market price on global exchanges and it is accepted for payment at a wide variety of merchants,” his report concluded, adding, however, that his paper shouldn’t be considered as a final “fatwa or shariah verdict.”
Although few had heard of Bakar or Blossom Finance before, his report attracted worldwide attention. Commentators argued that cryptocurrency-investment markets could potentially open up to the 1.6 billion Muslims around the world.
On the day the report was published, the price of Bitcoin rose by $1,000, reaching almost $8,000. Pure coincidence—or is Bakar onto something?