Indonesia’s council of religious leaders has declared that Muslims are forbidden from using crypto due to the elements of uncertainty, wagering, and harm. Asrorun Niam Sholeh, the head of religious decrees, said this today during the council’s expert hearing. If crypto as a commodity or asset can abide by Shariah principles and show a clear benefit, then it can be traded, he said furthermore.
The National Ulema Council, or MUI, holds the authority on Shariah law compliance in the country that is home to the world’s largest Muslim population, with the finance ministry and central bank consulting them on Islamic finance issues.
There are 232.3 million Muslims in Indonesia. 90% of the entire country’s population are Muslims, according to the U.S. Department of State. Indonesia is the world’s fourth-largest country by population and the 10th largest economy by purchasing power parity, according to the World Bank.
Up until now, the government of Indonesia has been supportive of virtual assets, by allowing them to be traded alongside other commodity futures as an investment option and even setting up a cryptocurrency-focused exchange platform by year-end. It doesn’t, however, allow the use of crypto assets as a form of currency, as the rupiah is the only legal tender in the country.
The decision to ban cryptocurrency doesn’t mean crypto trading will be halted in the country, but it could deter Muslims from investing in the digital assets and local institutions might begin to reconsider issuing cryptocurrency assets. Bank Indonesia has been contemplating a central bank digital currency, with no decision announced as of right now.
The religious council’s in Indonesia’s finance sector have increased after the passage of a new decree on Shariah Banking. Under the decree, the country’s financial institutions are obligated to have a division that follows Islamic laws, according to the East Asia Forum.
Crypto transactions added up to $26 billion in the first five months of the year in Indonesia, and according to Indonesia’s commodity futures trading regulator Bappebti, there were about 4.5 million crypto investors in the country as of May.
02 Feb 2023
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