Indonesia’s Religious Leaders Reject Cryptocurrency

Indonesia’s National Ulema Council considers cryptocurrency to be haram (U.K. Today News).

Indonesia’s foremost council of religious leaders, the National Ulema Council (MUI), ruled that cryptocurrency is haram, or in violation of the tenets of Islamic Sharia law. Asrorun Niam Sholeh, head of fatwa, or religious decrees, announced the decision on November 11. 

According to Sholeh, the MUI classified cryptocurrency as haram because it contains elements of uncertainty, wagering, and harm. The religious leader added that cryptocurrencies may still be traded if they are demonstrably in accordance with Sharia law. 

The council’s decision is not legally binding, and will not stop investments in crypto assets within Indonesia. However, the decision is likely to be influential, as 87 percent of Indonesians identify as Muslim and are therefore likely to be discouraged from future trade in crypto assets. 

Historically, Indonesian institutions have valued and abided by MUI’s rulings. The finance ministry and central bank often take the council’s decrees into account when making Islamic finance decisions. 

However, it is unclear whether the recent condemnation of crypto will impact governmental policy. Officially, the Indonesian government supports investments in crypto assets. 

The MUI’s decision comes as Bank Indonesia is reportedly weighing a possible decision to supply a digital currency to its customers. While the ruling’s effects on the central bank remain ambiguous, it is likely that the MUI’s decision will deter local banks from supplying crypto assets, particularly in Muslim-majority regions of the country.

In the first five months of 2021, Indonesian cryptocurrency transactions totalled 370 trillion rupiah ($26 billion). This was a small proportion of the global market, which totaled $3 trillion. The MUI’s classification of crypto as haram may lower this share even further. 

In spite of Indonesia’s religious council’s decree, other Muslim-majority countries have pursued different policies towards cryptocurrency. The United Arab Emirates allows limited crypto trading in what is known as Dubai’s free zone, while Bahrain’s central bank has supported crypto assets since 2019.