Contesting FinTech Fatwa Compliance Through Maqasid al-Shariah in Indonesia and Malaysia

Abstract

The accelerating expansion of financial technology in Muslim-majority economies has exposed a critical governance gap in Islamic finance: the frameworks through which fatwa-issuing bodies certify fintech products as Sharia-compliant remain organized around contractual permissibility rather than substantive justice. This article examines how DSN-MUI in Indonesia and the Shariah Advisory Council in Malaysia conceptualize and operationalize Sharia compliance in their fintech fatwas, and evaluates both bodies' outputs against the principles of Maqasid al-Shariah. Employing a normative-doctrinal legal research design and a functional comparative law method, the study analyzes five primary fatwa documents spanning digital payments, peer-to-peer financing, equity crowdfunding, and digital asset trading. The analysis reveals that despite significant institutional differences between the two jurisdictions, both bodies share a governance epistemology organized around contractual validity, producing a systematic blind spot: inattention to risk distribution, algorithmic transparency, and welfare outcomes. Evaluated against three maqasid dimensions, hifz al-mal, hifz al-aql, and maslahah, both institutions perform adequately on the prohibitory dimension of the objectives while failing on their positive dimension. The article argues that this failure is structural rather than incidental, a predictable consequence of governance frameworks whose organizing question cannot generate the answers that substantive justice requires. A reformative framework grounded in existing classical doctrine is proposed, incorporating post-issuance review cycles, outcome documentation requirements, and structural reform of Sharia supervisory board accountability. The findings contribute to comparative Islamic legal studies, maqasid scholarship, and the emerging literature on religious authority and technological governance.