Crypto Is Forbidden For Muslims, Indonesian Sharia Council Rules

The biggest religious council for Muslims in Indonesia has deemed cryptocurrencies like Bitcoin ‘haram’ or forbidden in the country. The reason is the presence of elements of “uncertainty, wagering, and harm,” said Asrorun Niam Sholeh, the chairman of Indonesian Ulema Council's Fatwa Commission.

The ruling raises a challenge to the adoption of cryptocurrency in the world's biggest Muslim country by population. The Indonesian Ulema Council, or Majelis Ulama Indonesia (MUI), is responsible for Sharia compliance in the country, and authorities are known to turn to the council for advise on financial matters.

MUI held a hearing on the issue of cryptocurrency trading, as reported by Bloomberg. The hearing was attended by several religious heads, and it was decided that cryptocurrencies can be traded if they show any clear usability and follow the tenets of the Sharia law.

In order to be declared as an asset under the Islamic law, cryptocurrencies need to have a clear value and a physical existence. The Islamic body compared cryptocurrency trading to gambling and mentioned that if they have an underlying asset and carry clear benefits, they’ll be legal under religious law.

In a similar turn of events, the East Java branch of Nahdlatul Ulama (NU), another religious organization in the country, issued a ‘fatwa’ and forbade Muslims from trading or using them.

However, the government remains supportive of cryptocurrencies, allowing them to be traded alongside other commodities from an investment point of view. The authorities are planning to tax cryptocurrencies as well, according to a report. But, payments cannot be made with these digital currencies.

This new order by the religious council is not legally binding on the government and other financial authorities of the country. But it is expected that a number of Muslim traders will balk in dealing with cryptos after the decision by the MUI.

To compare the adoption volumes in Indonesia, as of May, the total volume traded in cryptocurrencies has reached 370 trillion rupiah ($25.96 billion). The volume at the end of 2020 was 65 trillion rupiah ($45 billion). Also, the number of traders jumped from 4 million to 6.5 million from the end of 2020 to 2021.