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Cryptocurrency regulations in Muslim countries

In 2021 digital assets moved from the fringes of the economy and began to enter the mainstream, prompting more widespread public adoption. In November 2021, with bitcoin prices peaking around the $60,000 level, the total value of all cryptocurrencies surpassed $3 trillion, an increase from approximately $500 billion in December 2020. Today there are more than 16,000 individual cryptocurrencies in circulation, led by bitcoin. Total daily trading volumes are now estimated to be more than $275 billion on more than 400 platforms. The regulation of cryptocurrencies sector require international coordination and engagement with the industry as it presents an opportunity for further development. Crypto-assets, cryptocurrencies, central bank digital currencies and non-fungible tokens make up the new “crypto” universe, and each provides unique benefits, as well as regulatory challenges and complexities. In this article we provide a summary picture of crypto regulation in some countries where Muslims are the majority and which governments has already started to pay attention to crypto.

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Crypto regulation in in Muslim countries


In Indonesia virtual currencies are not considered legal tender. In 2019 the Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) approved regulation no. 5/2019,94 which legally recognizes and regulates bitcoin and other cryptocurrencies as commodities. Derivative transactions and cryptocurrency exchanges are also subject to regulatory requirements of Bappebti. The regulation defines a crypto-asset as “an intangible commodity in the form of a digital asset that uses cryptography, a peer-to-peer network and distributed-ledger technology to regulate the creation of new units, verify transactions and ensure transaction security without the involvement of a third-party intermediary.” Bank Indonesia, the country’s central bank, has banned the use of cryptocurrencies as a payment tool. Indonesia has also banned financial firms from facilitating crypto sales. Indonesia’s Financial Services Authority (OJK) said it has “strictly prohibited financial service institutions from using, marketing and/or facilitating crypto asset trading,” the regulator said in a statement95 posted on Instagram. The ministry is facilitating the establishment of a separate bourse for digital assets, called the Digital Futures Exchange, which officials say will be launched in the first quarter of 2022. It warned that the value of crypto-assets often fluctuates and that people buying into the digital assets should fully understand the risks. The warning follows similar concerns by the central banks of Thailand and Singapore.


The Securities Commission Malaysia (SC) issued guidelines on the regulation of various digital currency platforms operating in the country. The Capital Markets and Services (Prescription of Securities) (Digital Currency and Digital Token) Order 2019102 ruled that digital tokens are “securities” for purposes of securities laws. Digital currency is defined as “a digital representation of value recorded on a distributed digital ledger that functions as a medium of exchange and is interchangeable with any money, including through the crediting and debiting of an account.” All exchange offerings and digital asset custodians are required to register and “assess and conduct the necessary due diligence on the issuer, review the issuer’s proposal and the disclosures in the whitepaper, and assess the issuer’s ability to comply with the requirements of the Guidelines and the SC’s Guidelines on Prevention of Money Laundering and Terrorism Financing.” The position on the taxation of cryptos in Malaysia is unclear. The Inland Revenue Board of Malaysia (IRB) has not issued definitive guidelines on the taxation of cryptos. With regards to cryptocurrency transactions, the IRB has cited Section 3 of the Income Tax Act 1967 and indicated that the provision can be applied to active cryptocurrency traders. The IRB has said further that several factors may determine whether profits from crypto activities would be subject to income tax.


The 2018 Financial Law of Algeria prohibits the use of any cryptocurrencies as well as the purchase, sale, use, and possession of virtual currencies.


The Egyptian government banned trading of cryptos in 2018 because of religious decrees under Islamic law. Despite the ban, several international crypto trading platforms have reported significant user growth in the country in recent years. The Central Bank of Egypt123 has cited the importance of art 206 of the Central Bank and Banking System Law promulgated by Law No. 194 of 2020. The law prohibits the issuance, trading, promotion, platforms, and other activities related to cryptos.


In the midst of a financial, currency and debt crisis, Turkey’s regulatory environment surrounding cryptos is a very mixed picture. Although it is not “illegal” to own cryptos, authorities have demanded user information from crypto trading platforms and regulators frequently cite crypto as a form of evasion for capital controls and taxes. In April 2021, Turkey’s Central Bank81 banned the use of cryptocurrencies saying they may be used, directly or indirectly, to pay for goods and services. In May 2021, President Erdoğan issued a decree that added82 cryptocurrency exchanges to a list of institutions that must operate under AML/CTF regulations. Despite the harsh rhetoric, bans on use in payments, and lack of any regulatory supervisory authority, public interest by Turkey’s citizens has soared as they are increasingly adopting and using cryptocurrencies. The Financial Crimes Investigation Board (MASAK) oversees crypto service providers on AML and compliance issues. The Capital Markets Board (SPK) governs the crypto market, including ICOs and token offerings. MASAK published a guide for crypto asset service providers and President Erdogan have announced that a bill regulating digital assets is forthcoming. Turkey is also developing a digital central bank currency.


The Iranian Central Bank has authorized banks and currency exchanges to use cryptocurrencies mined by licensed crypto miners in the county. Although mining is legal, the country takes a heavy-handed approach requiring firms to sell cryptos to the central bank to fund imports. The country has issued more than 1,000 licenses to crypto miners and shut down unlicensed firms. Trading outside the country has been banned, to stop capital flight. The use of cryptos for payments has also been banned. In early 2022, the country said it was exploring the possible use of cryptos for international trade, which potentially would allow some businesses to make international payments using cryptos.


Despite a law in 2017 banning crypto in Morocco, the public continues to operate underground, circumventing the restrictions. The Morocco Foreign Exchange Office has said it does not support “hidden payment systems” not backed by government institutions.

Saudi Arabia

The Saudi Central Bank and Minster of Finance have warned “against dealing or investing in virtual currencies including cryptocurrencies as they are not recognized by legal entities in the kingdom. They are outside the scope of the regulatory framework and are not traded by financial institutions locally. Such crypto currencies have been associated with fraudulent activities and attract concern that they may be used in illegal and illegitimate financial activities in addition to their high-investment risks related to frequent price fluctuations.” While the Saudi Central Bank has warned the public of the risks associated with cryptocurrencies, and that they are not legal tender, bitcoin is accepted by small businesses and merchants, and the government has taken a very light regulatory approach thus far. In recent years, Saudi Arabia has worked with the United Arab Emirates to attract crypto companies to the region. Cryptos are sure to play and important role in the country’s long term effort to diversify its economy and become an innovation hub — “Saudi Vision 2030.” The Saudi Central Bank has begun to use blockchain technology in its activities in the banking sector and to keep pace with market trends. It has also created a regulatory sandbox for collaboration on new digital banking services and blockchain education programs.

United Arab Emirates

The UAE is estimated to be the third-largest crypto market in the Middle East, with total transaction values estimated at approximately $26 billion. The Dubai Financial Services Authority included a crypto regulatory framework in its 2021 business plan for firms operating in the Dubai International Financial Center. In early 2022 the UAE announced a licensing program to be rolled out early in the year. The UAE also said it wants to build and attract a mining ecosystem in the region. The UAE Securities and Commodities Authority issued its regulation in 2020, which seeks to provide clarity as to how crypto and other digital assets may be used as a stored value when purchasing various goods and services. The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market has enhanced its “Guidance for the Regulation of Crypto Asset Activities”.

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