The Indonesian Ulema Council (MUI), the nation’s top Islamic scholars body has officially declared cryptocurrency ‘haram’, or forbidden. The decision was made by the council at the Ljtime Ulama Forum on Thursday.
MUI chairman, Asrorun Niam Soleh, elaborated on the council’s decision, noting:
“From the deliberations that have been determined, there are three legal dictums. Namely, the use of cryptocurrency as a legal currency is haram because it is gharar, dharar, and contrary to Law Number 7 of 2019 and BI Regulation Number 17 of 2015.”
Cryptocurrencies were made legal in Indonesia in 2018, when the Ministry of Trade approved the trading of Bitcoin and crypto assets as commodities. However, the central bank of Indonesia does not recognize cryptocurrency as a means of payment, and many other banks treat crypto transactions with suspicion.
Indonesia is home to several crypto exchanges including the Binance-backed platform Tokocrypto, and has established strict anti-money laundering regulations since 2019.
The decision to declare cryptocurrency haram, is an interpretation of Islamic finance which forbids risk, harm, and speculation under Sharia law. According to Asorun, the fact that there is no physical form means that cryptocurrency does not meet syar’i sil’ah requirements.
Despite the declaration by the MUI, the council’s views and decisions on cryptocurrency are not legally binding, however with Indonesia being home to the largest muslim population in the world, its influence extends to a significant sector of the population.
Other Islamic scholars and bodies have decreed cryptocurrency as permissible for muslims, however there is no singular interpretation of cryptocurrency that make cryptocurrencies legally binding under islamic law. The Independent reported a London mosque that accepted Bitcoin donations following the declaration by an Islamic scholar that cryptocurrency was halal, or permitted.
With a quarter of the world’s population being muslim, the implications of interpretations of cryptocurrency as either forbidden or permitted has the potential to aid or hinder cryptocurrency adoption for a large percentage of the world. The current uncertainty surrounding cryptocurrencies is not simply limited to religion, however, and reflects a larger issue of regulation and uncertainty in the cryptocurrency industry.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.