While cryptocurrency is growing steadily in popularity, Indonesia’s council of religious leaders have announced that crypto and digital assets are banned for Muslims. Indonesia holds the largest Muslim population of any country in the world, and the National Ulema Council is the religious authority that makes decisions based on Shariah law.
In their deliberation and consultation with experts, they determined that crypto, with its rollercoaster surges and drops, is akin to wagering or gambling and the uncertainty can lead to real harm. For that, the council forbid Muslims from trading in digital assets and cryptocurrencies.
The head of religious decrees made the announcement, and it is not one to be taken lightly. In such a heavily Muslim country, the council holds great influence, with the central bank and the government’s Ministry of Finance consulting with them first to keep in line with Islamic finance decisions.
While the Indonesian government has made moves to embrace crypto, it is not a legal form of currency in the country for making payments. Rather, the government allows it to be traded as an investment similar to commodity futures and has also been focused on creating a crypto exchange by the end of 2021.
About US $26 billion worth of crypto transactions took place in Indonesia just in the first 5 months of the year (compared to a total of about US $ trillion total worldwide). Bank Indonesia has even been considering creating a central bank digital currency.
But now, contrary to other countries like Bahrain who have supported crypto assets for 2 years now and the United Arab Emirates where crypto trading in Dubai’s free zone is permitted, the National Ulema Council had taken a hard negative stance regarding cryptocurrency and digital assets.
They say that if crypto can find avenues that demonstrate a clear benefit while abiding by the principles of Shariah law, only then can it be traded by devout Muslims. This stance may cool the crypto trend in Indonesia, discouraging financial institutions from creating digital currencies and dissuading Muslim individuals from investing in crypto or digital assets.
SOURCE: Al Jazeera