Indonesia's Islamic Authority Declares Cryptocurrency Haram, Banned for Muslims – Regulation

Indonesia's supreme Islamic body, the country's authority for Sharia compliance,has reportedly declared cryptocurrency haram, banned for Muslims under Islamic law. The Indonesian Ulema Council stated that crypto contains elements of uncertainty, betting and harm.

Cryptocurrency is banned for Muslims under Islamic law in Indonesia

Indonesia's Ulema Council (Majelis Ulama Indonesia or MUI), the country's leading Islamic body that has authority for Sharia compliance, has allegedly declared the use of crypto as haram currency, which is prohibited for Muslims under Islamic law.

Asrorun Niam Sholeh, head of religious decrees, said on Thursday after the council held an expert hearing that cryptocurrency has elements of “uncertainty, betting and harm,” Bloomberg reported.

However, he noted that if crypto can adhere to Shariah principles and demonstrate a clear advantage, it can be traded as a digital asset or a commodity.

Indonesia, the country with the largest Muslim population, has an estimated 231 million Muslims, or 86.7% of the country's population.

The Ulema Council advises the Ministry of Finance and the country's central bank on Islamic financial matters. It includes many Indonesian Muslim groups, including Nahdlatul Ulama (NU), Muhammadiyah and smaller groups such as Syarikat Islam, Perti, Al Washliyah, Mathla'ul Anwar, GUPPI, PTDI, DMI and Al Ittihadiyyah.

The MUI decree is not legally binding and does not mean that cryptocurrency is banned in Indonesia. However, it could discourage Muslims from investing and discourage local institutions from issuing or providing services in crypto assets.

In October, a provincial branch of one of the largest Islamic organizations in Indonesia, Nahdlatul Ulama, did similar explained Cryptocurrency haram under religious law.

However, the Indonesian government has indicated that the country will not impose a total ban on cryptocurrency like China has done. Crypto assets are allowed to be traded alongside commodity futures in Indonesia, but cannot be used as currency. Meanwhile, the government is pushing to set up a crypto exchange by the end of the year and Bank Indonesia is exploring a central bank digital currency (CBDC).

What do you think about the Indonesian Ulema Council declaring cryptocurrency Haram for Muslims? Let us know in the comments section below.

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