Malaysia Shariah Advisory Council Chairman Sees ‘Great Potential’ in Crypto; Unclear Laws Held Back Adoption
A Shariah Advisory Council chairman in Malaysia believes cryptocurrencies have great potential. The comments were made by Dr. Modh Daud Bakar, the Securities Commission Malaysia (SC) Shariah Advisory Council chairman. However, he also highlighted the challenges in adopting these digital assets, given the lack of understanding about the technology among the masses.
The chairman's comments come just three months after a monumental judgment allowing transactions and trade of digital assets under the Islamic law.
Mr. Bakar made these bullish comments about cryptocurrencies during SCxSC Fintech Conference 2020 in Kuala Lumpur on Oct. 6. At the conference, Mr. Bakar also noted that only 2% of Malaysians know about the nascent technology. He said that since digital assets were not considered a legal tender under Islamic laws, it was seen as a commodity, quite similar to gold and silver. Bakar explained during the conference,
“It is a medium of exchange, and we cannot stop people [from using] commodities as a medium of exchange. It is as good as buying an e-ticket or commodities in the market.”
“The acceptance of digital assets] can open up so many interesting areas in Malaysia, in which crypto can be deemed as investment assets where people can buy and hold for trading. The potential of this currency is as great as it comes with a growing digital economy of the world.”
How does Shariah Law see Digital Assets?
There has been a great debate on whether digit assets are acceptable under the Islamic laws with differences of opinion based on regions. However, in 2018 an advisor to the Indonesian FinTech firm declared Bitcoin as permissible under sharia law. In July this year, Malaysia’s council declared digital assets trading as permissible.
With a population of over 60% of Muslims, Malaysia has benefited the most from this decision. It helps further the adoption of digital assets and offers more exposure to the new population to nascent technology like Bitcoin. Bakar concluded,
“This has opened opportunities to take advantage of cryptos as a commodity or investment in a company.”