By John Ikani
Indonesia’s top religious body has declared that Bitcoin and other cryptocurrencies are forbidden under Islamic law and should not be traded in the world’s biggest Muslim majority nation.
Head of religious decrees, Asrorun Niam Sholeh on Thursday told Reuters that the National Ulema Council (MUI) has deemed cryptocurrency as haram, or banned, as it has elements of uncertainty, wagering and harm, and are in violation of state laws.
Asrorun added that the use of digital tokens as a commodity to trade is also forbidden, citing their lack of a clear value and physical structure.
He however left room for change, saying the council could approve cryptocurrency if modifications are made to comply with Sharia law.
What you should know
232.3 million. That’s the approximate number of Muslims in Indonesia, where nearly nine in ten of its population is Muslim, according to the U.S. Department of State.
Indonesia has the world’s fourth-largest population and the 10th largest economy by purchasing power parity, according to the World Bank.
Total crypto transactions in Indonesia totaled 370 trillion rupiah, or $25.96 billion, between January and May this year, according to Indonesia’s trade ministry.
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, with no decision announced as yet.
The MUI’s decree is not legally binding as it is not part of the government, but its ruling may affect investment decisions by some Muslims.
Other predominantly Muslim countries support cryptocurrency. In September, the United Arab Emirates’ financial regulators agreed to offer the trading of digital tokens in Dubai’s free zone. In 2019, Bahrain became the first Arab country to issue rules on crypto and has since backed crypto.
