Key Takeaways
- Indonesia Religious council rules that crypto is forbidden for Muslims.
- The National Ulema Council, or MUI, has considered cryptocurrency as haram or banned.
- MIU is a government-funded organization, and hence its latest decision is not legally binding in Indonesia.
The National Ulema Council of Indonesia is the country’s highest religious authority. It has been stated that Muslims cannot trade cryptocurrencies. They cannot do so as it included features of uncertainty and betting. However, Asrorun Niam Sholeh, chairman of MUI’s Fatwa Commission, believes that cryptocurrencies could become religiously legal if they comply with Sharia law’s tenets and benefit the public.
MUI has the authority in Sharia compliance. While the MUI ruling does not rule out the possibility of all cryptocurrency trading in Indonesia, it may discourage Muslims from investing in the assets and cause local institutions to reconsider issuing crypto assets.
Bank Indonesia has been considering a central bank digital currency. But, it has yet to decide on it. However, it is unlikely that cryptocurrency trade will cease in the world’s largest Muslim country. As a result of the order, some Muslims may be discouraged from utilizing prominent cryptocurrencies such as Bitcoin and Ethereum.
The MUI discussed Bitcoin as part of the Ulama Fatwa Commission. It uses Islamic law to address some of Indonesia’s most pressing social, political, economic, and legal challenges. According to reports, the council’s newest decision is not legally binding despite the MUI being a government-funded body. Even though the fatwa is not Indonesian law, some sources claim that it might be used as a source of “legislative inspiration.”
According to Bloomberg, the MUI’s recent decision does not imply that all crypto trading in Indonesia will be prohibited. On the other hand, the council may discourage Muslims from investing in cryptocurrency and force local institutions to reconsider issuing crypto assets.
The cryptocurrency was declared “not a legitimate instrument of payment” by Indonesia’s central bank in 2018. As a result, the country prohibits cryptocurrency for payments, but citizens can trade it as a commodity. The Indonesian government has considered charging taxes on crypto trading earnings in recent months, owing to the cryptocurrency’s growing popularity during the outbreak. However, in the past, Indonesia’s Financial Services Authority has used cryptocurrency’s price volatility as a cause to discourage investors from investing in the business, claiming that its fundamental value was still unknown.
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