MUHAMMADIYAH.OR.ID, YOGYAKARTA—The legal status of crypto assets cannot be separated from the foundational concept of property in Islamic commercial jurisprudence, according to Jaih Mubarok, Vice Chairperson of the Council for Religious Opinion and Reform of Muhammadiyah Central Board and a scholar of Islamic economics.
Speaking at the National Halaqah on Crypto Investment Law at Ahmad Dahlan University on Saturday (28/2), Jaih said discussions on digital assets must begin with a clear understanding of the definition of “property” (mal) in fiqh muamalah maliyah.
Assets, he explained, fall within the broader category of property. Therefore, their legal status depends on how Islamic scholars define that concept. Classical jurists did not derive the definition of property directly from scriptural texts. Instead, they constructed it through juristic reasoning.
In the Hanafi school, property refers to something desired by human beings. Meanwhile, the majority of scholars define it as something that may lawfully be utilized under sharia.
“If an object cannot be lawfully utilized, then it does not qualify as property,” he said.
As an example, he cited alcohol. Although it has physical form and economic value in some societies, Islamic law prohibits its use and sale. Therefore, it does not meet the criteria of property under sharia.
Social Context and Ownership Criteria
Jaih emphasized that the concept of property in Islam carries social and cultural dimensions. An item may qualify as property in one community, but not in another. It all depends on its recognized benefit and social acceptance.
Beyond lawful benefit, property must also be capable of becoming the object of ownership and contractual exchange. Not everything beneficial may be traded. The sun, for instance, provides immense benefit but cannot be owned individually or transacted.
Some classical jurists further required that property be capable of storage and control. Thus, ownership and dominion from essential elements in Islamic economic transactions.
Islamic jurisprudence also classifies property into multiple categories, including fungible and non-fungible goods, movable and immovable assets, consumable and durable goods, as well as visible and intangible holdings such as digital bank balances. These classifications demonstrate the flexibility and complexity of Islamic legal thought as civilization evolves.
Accordingly, Jaih argued that contemporary financial technology requires scholars to revisit classical frameworks so they remain relevant in addressing digital economic phenomena.
Crypto as Currency or Asset
Turning specifically to cryptocurrency, Jaih referred to classical legal theories on money. In traditional Islamic literature, currency ideally originates from a legitimate authority rather than private entities. Historically, gold and silver served as standards of value due to their stability.
“Money is not merely a medium of exchange,” he said. “It shapes how people measure and perceive value.”
He noted that certain characteristics once attributed to crypto, such as the absence of oversight, have shifted as regulation and technology develop. Therefore, renewed scholarly examination is necessary.
Jaih distinguished between unbacked crypto assets and those supported by underlying assets. The latter, he suggested, allow clearer legal analysis within Islamic jurisprudence.
“If there is an underlying asset, the fiqh analysis becomes more straightforward,” he said.
Given the high volatility of crypto markets, he cautioned that that participation should be limited to individuals who understand the associated risks. Risk literacy, he stressed, constitutes a prerequisite if crypto is to find space within a sharia-compliant economic system.
Concluding his remarks, Jaih said the legal determination of cryptocurrency depends on its structure. If it functions as money, it falls under the rules of governing currency exchange (bai’ al-sharf). If it represents ownership, in an enterprise, it resembles investment transfer mechanisms. Through such distinctions, scholars can define clear boundaries between permissible practice and what contravenes sharia principles.
Translator: Bintang Adrian
