Fri 12 November 2021:
According to Indonesia’s council of religious authorities, Muslims are prohibited from using crypto assets as a form of currency.
The National Ulema Council, or MUI, has deemed cryptocurrency as haram, or banned, as it has elements of uncertainty, wagering and harm, Asrorun Niam Sholeh, head of religious decrees, said on Thursday after the council held an expert hearing. If cryptocurrency as a commodity or digital asset can abide by Shariah tenets and can show a clear benefit, then it can be traded, he added.
Trading of cryptocurrencies as a commodity is also unlawful, with the MUI likening it to gambling, because it does not meet Islamic rules, such as for the goods to have a physical form, a clear value, and a known exact amount, among other reasons, he said.
In the country with the world’s largest Muslim population, MUI is in charge of Shariah compliance, with the finance ministry and central bank advising them on Islamic finance matters.
The government has backed crypto assets, allowing them to be traded alongside commodities futures as an investment alternative and pushing for the establishment of a crypto-focused exchange by the end of the year. The usage of crypto assets as a form of currency is not permitted in Indonesia, as the rupiah is the country’s only legal tender.
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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 has yet to make a decision.
In Indonesia, cryptocurrency transactions totaled 370 trillion rupiah ($26 billion) in the first five months of the year, a small part of the $3 trillion global market.
Indonesia’s religious leaders’ views may differ from those of religious leaders in other Muslim-majority countries. The United Arab Emirates’ free zone in Dubai now allows crypto trading, and Bahrain has backed crypto assets since 2019.
El Salvador in September became the world’s first nation to approve Bitcoin as legal tender after the country’s congress voted to approve it in law in June.
The Central American country made history when it bought its first 200 bitcoins, becoming the first known nation to do so.
Bloomberg | Reuters
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