One of the largest Islamic organizations in Indonesia, Muhammadiyah, through its Majelis Tarjih dan Tajdid, has officially issued a fatwa regarding the legal status of crypto assets from the perspective of Islamic law.

In the fatwa signed on March 4, 2026, in Yogyakarta, the council stated that cryptocurrencies can be regarded as digital financial assets that are fundamentally permissible to trade, as long as they comply with a number of strict Sharia requirements.

The fatwa was issued in response to the growing adoption of cryptocurrencies in Indonesia as well as the global economic transformation toward digital systems based on blockchain technology.

“Crypto assets meet the criteria outlined above (māl mutaqawwam) because they possess utility desired by society, can be stored in digital wallets, and have economic value recognized socially (‘urf). Therefore, their status as māl mutaqawwam is considered valid,” the fatwa states.

The council noted that cryptocurrencies are no longer merely small speculative instruments but have become a global economic reality. The total market capitalization of the global crypto market has reached trillions of dollars, with the two largest assets—Bitcoin and Ethereum—dominating the market.

In Indonesia, the number of crypto investors reportedly surged to 20.16 million people in the first half of 2024, prompting the need for legal clarity for Muslims in responding to this financial phenomenon.

Technically, cryptocurrencies are described as digital assets represented by cryptographic codes recorded across a global network of computers through blockchain technology. This system enables transactions to be conducted directly between senders and receivers without traditional intermediaries such as banks, while also making the assets difficult to counterfeit or duplicate.

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Legal Status: Crypto as Digital Property

From the perspective of Islamic jurisprudence in financial transactions (fiqh muamalah), the council considers crypto assets to fall under the category of māl mutaqawwam, meaning property that can be legitimately owned and holds economic value.

This assessment is based on several key considerations:

• Cryptocurrencies have economic value recognized by society
• They can be stored in digital wallets
• They provide utility within technological ecosystems

Therefore, the basic ruling on crypto transactions is mubah (permissible), as long as they do not contain elements that violate Sharia principles.

Strict Conditions for Crypto Transactions

Although deemed permissible in principle, the council emphasized that this status is conditional and may become prohibited if it violates Islamic legal boundaries.

Among the key requirements mentioned are:

1. The crypto asset must be halal

Crypto assets must not be associated with activities prohibited in Islam, such as:

• digital gambling
• pornography
• dark web or illicit market activities

2. The asset must have real utility

Cryptocurrencies must serve a clear function, such as:

• store of value
• platform utility or governance rights
• technological infrastructure, such as supporting smart contracts

Tokens that exist purely for speculation or are merely meme coins without utility are considered not to meet Sharia requirements.

3. The project must not operate under a Ponzi scheme

Crypto projects whose profits depend on funds from new investors to pay earlier participants are categorized as fraud (tadlīs) and are therefore prohibited.

Prohibited Trading Practices

The fatwa also highlights several practices commonly found in crypto markets that are considered incompatible with Sharia principles, including:

• Futures trading or derivatives contracts
• Leverage and margin trading involving interest-bearing loans
• Market manipulation, such as pump-and-dump schemes
• Short selling, or selling assets that are not owned
• Interest-based crypto lending

These practices are considered to involve elements of riba (usury), gharar (uncertainty), maysir (gambling), and deception.

Airdrops Considered Permissible with Conditions

In the same fatwa, the practice of airdrops—the distribution of free tokens by crypto projects—was deemed generally permissible, as it can be categorized as a form of gift (hibah) or promotional reward.

However, this permissibility applies only if:

• it does not involve promoting prohibited activities
• it does not require users to deposit funds that are then used by organizers for profit.

Crypto Not Valid as Currency

The council also stressed that cryptocurrencies cannot be used as a payment instrument in Indonesia.

In addition to national regulations prohibiting their use as legal tender, cryptocurrencies are considered unsuitable as currency due to:

• extreme price volatility
• limited supply in some assets
• potential risks to economic stability.

Under Indonesian positive law, the use of cryptocurrencies as a payment method is prohibited under the national Currency Law, while their status is recognized as investment assets or digital commodities.

Importance of Financial Literacy

Muhammadiyah emphasized that Muslims who wish to participate in crypto investments must possess adequate financial literacy and conduct independent research before engaging in transactions.

The public is also advised to use crypto trading platforms that are officially registered and supervised by authorities to minimize the risks of fraud and cybercrime.