Cryptocurrency legalization and economic growth dynamics: empirical evidence from OIC member states

Muhammad Rheza Ramadhan; Henderi

doi:10.31637/epsir-2026-2067

Autores/as

Muhammad Rheza Ramadhan Ministry of Finance https://orcid.org/0009-0007-1559-0591
Henderi The University of Western Australia https://orcid.org/0009-0003-1636-1820

DOI:

https://doi.org/10.31637/epsir-2026-2067

Palabras clave:

Cryptocurrency regulation, Economic growth, Islamic finance, Financial inclusion, Sharia law, Blockchain, Monetary policy, Economic development

Resumen

Introduction: This study examines how cryptocurrency legalization and prohibition impact economic growth, with a particular focus on Islamic countries where regulatory approaches vary widely. The unique context of Sharia law considerations adds complexity to cryptocurrency adoption in these regions, creating distinct regulatory environments worth analyzing. Methodology: The research employs the Difference-in-Differences (DiD) method with staggered treatment to analyze the economic effects of different regulatory frameworks across multiple Islamic nations. This approach controls for time-invariant differences between countries and common time trends, allowing for causal inference about regulatory impacts. Results: Cryptocurrency legalization has significantly boosted economic growth in Islamic countries, while banning cryptocurrencies has considerably reduced it. Discussions: Despite ongoing debates about Sharia compliance, cryptocurrency legalization enhances financial inclusion and provides legal clarity, both crucial for economic development. Strict prohibitions limit innovation, discourage investment, and reduce economic opportunities. Conclusions: While debates continue about whether cryptocurrencies are halal under Sharia law, the economic benefits of legalization provide compelling evidence for policymakers to adopt inclusive and supportive regulatory frameworks.

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Biografía del autor/a

Muhammad Rheza Ramadhan, Ministry of Finance

Tax Policy Analyst at Directorate General of Taxes, Ministry of Finance, Indonesia. Research interests include tax policy, impact evaluation, cryptocurrency, economic growth determinants, and economic modeling. Experienced in analyzing fiscal measures and their economic impacts. Applies quantitative methods to assess policy effectiveness and develop evidence-based tax frameworks. Particularly focused on emerging digital economy taxation challenges, including cryptocurrency regulation. Skilled in economic modeling to forecast policy outcomes and growth patterns.

Henderi, The University of Western Australia

PhD Student at University of Western Australia specializing in taxation economics. Research interests center on tax policy, economic growth, and tax avoidance mechanisms. Studies the relationship between fiscal structures and growth indicators through econometric analysis. Examines how tax compliance and avoidance strategies influence resource allocation and economic efficiency. Applies academic rigor to develop models quantifying the impact of tax policy interventions on corporate behavior and economic outcomes.

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