In a ruling that could have far-reaching consequences, Indonesia’s largest Islamic organization has declared cryptocurrencies haram.
The Indonesian Council of Ulema (MUI) announced its position on Tuesday following a two-day meeting in Jogyakarta to discuss whether virtual currencies are compliant with Islamic principles. The MUI has made other controversial rulings in the past, including that yoga is forbidden for Muslims and that people should avoid wearing silk or polyester garments.
MUI is responsible for Shariah compliance throughout the country. The finance and monetary departments consult them on Islamic finance matters.
The Indonesian Government
The government has been friendly towards cryptocurrencies, allowing them to be traded with commodity futures as an investment choice and pushing for a crypto-focused exchange by the end of the year. Indonesia does not permit cryptocurrency usage as a form of money since the rupiah is the only legal currency in the country.
Is This the End of Crypto Trading in Indonesia?
MUI’s decision to ban cryptocurrency trading does not signal the end of cryptocurrency trading in Indonesia. However, it may prevent Muslims from investing in cryptocurrencies and make local organizations reconsider issuing crypto assets. The Reserve Bank of Indonesia has considered a central bank digital currency, but no announcement has been made yet.
- Following a hearing, Indonesia’s authority on Shariah compliance, the National Ulema Council (MUI), announced that crypto is prohibited due to uncertainty and betting elements.
- According to Asrorun Niam Soleh, cryptocurrencies might be traded as commodities if they meet Shariah law and offer a distinct advantage.
- Indonesia has many Muslims, with around 229 million Muslim people, or about 12.7 percent of the global total.
- Indonesia was previously reported to consider a crypto trading tax to increase revenue due to the COVID-19 epidemic.
- In January 2018, the country’s central bank declared cryptocurrency “not a legal medium of exchange,” but trade is still legal.