The Regulation of Islamic Fintech in Indonesia: Harmonizing Sharia Principles, Consumer Protection, and Positive Law

Abstract

Sharia financial technology in Indonesia is governed by three regimes that were built separately: the fatwas that define sharia compliance, the financial services regulations that license and supervise providers, and the consumer protection framework that addresses conduct. Each functions on its own terms, and the points at which they fail to meet are where consumers are harmed. This study analyses the regulatory architecture of Indonesian Islamic fintech, examines the channel through which fatwa-derived standards acquire binding force, assesses the adequacy of consumer protection against the purposes of the classical prohibitions, and evaluates the coherence of dispute resolution. The research is normative juridical and doctrinal, using statutory, conceptual, and case approaches, supported by maqasid reasoning and by comparison at the level of regulatory technique. Compliance is defined by fatwas that have no place in the hierarchy of norms and is verified at the level of contractual form rather than of product economics and interface design. Consumer protection instruments are generic and do not track the harms the classical prohibitions targeted. Dispute resolution is fragmented between the religious courts, whose competence over sharia economic disputes is absolute, and the alternative institutions and arbitration clauses that platform contracts routinely specify. The validity channel for fatwa should be formalised, compliance should be audited at the level of system design, protective standards should be calibrated to demonstrable harm, and the relationship between the religious courts and alternative forums should be clarified by statute.