Malaysian religious scholars are now bullish on crypto investing just three months after a ruling that saw digital assets become permissible under Islamic law.
Malaysia’s knowledge gap challenges
The chairman of the Malaysian Securities Commission (SC) Shariah Advisory Council, Dr. Modh Daud Bakar said that crypto had great potential as an investment. He, however, added that the investment had faced many challenges in the country stemming from a lack of understanding of the asset class by most people.
While addressing attendees at the SCxSC Fintech Conference 2020 in Kuala Lumpur on Oct. 6, he said that only 2% of Malaysians have any knowledge of crypto-currencies. He said that because the asset class was not considered legal tender under religious law, it can be treated as a commodity as long as it is backed by items that must be exchanged in equal measure like Gold and Silver (Ribawi items).
“It is a medium of exchange, and we cannot stop people from using commodities as medium of exchange. It is as good as buying an e-ticket or commodities in the market.”
Potential of the asset class in Malaysia
Despite the knowledge gap when it comes to the asset class, Bakar pointed to the immense potential it has in the country. According to him, crypto can open up many areas and opportunities in the country.
“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,” said Bakar. “The potential of this currency is as great as it comes with a growing digital economy of the world.”
Religious questions still loom
Whether crypto is permissible in Islam is still up in the air. A 2018 statement by an Indonesian FinTech firm advisor declared that Bitcoin was “generally permissible” under Sharia law. The decision by the advisory council is likely to push a majority Islamic Malaysian population towards the digital space. The country’s three licensed exchanges in Sinegy Technologies, Luno Malaysia, and Tokenize Malaysia are likely to see a rise in transactions within the next few months.
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