Indonesia’s influential religious council bans trade in crypto assets for Muslims
Government of the Muslim-majority nation has been pushing to set up a crypto-focused exchange by the end of the year
The use of crypto assets as a currency is forbidden for Muslims, according to Indonesia’s council of religious leaders.
The National Ulema Council, or MUI, has deemed cryptocurrency as haram, or banned, as it has elements of uncertainty, wagering and harm, Asrorun Niam Sholeh, the head of religious decrees, said on Thursday after the council held an expert hearing. If cryptocurrency as a commodity or digital asset can abide by sharia tenets and can show a clear benefit, then it can be traded, he added.
MUI holds the authority on sharia compliance in the country that’s home to the world’s largest Muslim population, with the finance ministry and central bank consulting them on Islamic finance issues.
The government has been supportive of crypto assets, allowing it to be traded alongside commodity futures as an investment option and pushing to set up a crypto-focused exchange by the end of the year. Indonesia doesn’t allow the use of crypto assets as a form of currency, as the rupiah is the only legal tender in the country.
While the decision from MUI doesn’t mean all cryptocurrency trading will be stopped in Indonesia, the decree could deter Muslims from investing in the assets and make local institutions reconsider issuing crypto assets. Bank Indonesia has been mulling a central bank digital currency, but no decision has been announced yet.
Crypto transactions amounted to 370-trillion rupiah ($26bn) in the first five months of the year in Indonesia, still a fraction of the global market at around $3-trillion.
The stance of Indonesia’s religious leaders may diverge from their counterparts in other Muslim-majority countries. The United Arab Emirates has allowed crypto trading in Dubai’s free zone, while Bahrain has backed crypto assets since 2019.
Bloomberg News. More stories like this are available on bloomberg.com.
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