A COMPARATIVE ANALYSIS ON THE RULE OF ZAKAT ON CRYPTOCURRENCY IN MALAYSIA AND INDONESIA

Abstract

Zakat is one of the five pillars of Islam and has played an important role in the Muslim community. Nowadays, due to the emergence of technology, a type of money of called cryptocurrency is introduced. Unlike traditional currencies, which are issued and regulated by central banks worldwide, cryptocurrency is created using protocols devised by its creators. However, the Islamic law (Shariah) perspective regarding zakat on cryptocurrency seems to be unclear due to the ambiguous understanding and interpretation of the features as well as characteristics of cryptocurrency by Muslim jurists. In pursuant thereto, this research analyses the concept and rule of zakat on cryptocurrency from Islamic law based on the qualitative and descriptive cross- sectional analysis through the verses in the holy Quran, the Prophetic traditions, views of classical and contemporary Muslim jurists, and data obtained from reliable sources. For the comparative analysis, the research also provides the reference of the practise of zakat on cryptocurrency in Indonesia. The research found that zakat on cryptocurrency is legal whether cryptocurrency is classified as a currency or an asset. Therefore, with the increasingly widespread transactions that are used cryptocurrency as a medium of transactions by people, the issues of zakat on the cryptocurrency from an Islamic perspective should be resolved.