An Islamic legal review of smart contract regulation in digital economic transactions: A comparative study between Indonesia and China

Abstract

Purpose – This study analyzes and compares regulatory approaches to Islamic legal reviews of smart contracts in digital economic transactions in Indonesia and China.
Methodology – Utilizing a qualitative literature study method and a responsive legal theoretical framework, this research examines how two countries with distinct legal systems–Indonesia’s pluralistic system and China’s centralized system–adapt regulations to the development of blockchain-based digital contract technology.
Findings – The main findings indicate that Indonesia remains at an early stage, characterized by a reactive regulatory approach, lacks specific legal instruments, and faces challenges in integrating Sharia principles. Meanwhile, China has established a systemic and proactive regulatory framework that utilizes smart contracts in its judicial system and national digital economy. Differences in legal ideologies and institutional structures influence responses to technological innovation and demonstrate that regulatory harmonization must be contextual and inclusive of local values.
Implications – This research underscores the importance of collaboration across sectors and countries in developing smart contract regulations that are adaptive, fair, and ethical.
Originality – The originality of this research lies in its contribution to filling the literature gap through a comparative approach and the integration of Islamic law values in the legal discourse of the global digital economy.