Use of cryptocurrencies has been banned among followers of Islam in Indonesia. The ban was enacted by the Indonesian Ulema Council (MUI), the nation’s religious council.
Indonesia houses over 12 per cent of the world’s total Muslim population, making it the country with the largest Muslim population. Over 88 per cent of the country’s population identify as Muslim.
The MUI has slated cryptocurrency as forbidden according to Shariah law, likening it to gambling and bargaining. The practice of gambling is not permitted under Shariah law.
According to Islamic rules, currencies and goods must have a physical form and known exact value. Cryptocurrency is intangible and has no fixed value.
While the MUI’s ruling does not have inherent legal weight, it will likely have an impact on practicing Muslims’ investing behaviour. The MUI’s determination is a fatwa, meaning it has no binding legal ramifications but is rather an opinion from a high religious jurist.
Fatwas are reached by Islamic religious authorities through a type of dialogue called a bahtsul masail.
Although the MUI has determined that cryptocurrency is inherently haram (forbidden), this determination is not unanimous among Muslim populations. The use of cryptocurrency is not banned in other Islamic nations like the United Arab Emirates and Bahrain.
Indonesia has a thriving crypto industry, with the Indonesian Trade Ministry reporting a gain of roughly 6.5 million investors in the industry by May this year.
The practice of engaging with cryptocurrency, in addition to being considered gambling, is also perceived as an opportunity for fraud, says the MUI.
“The participants of the bahtsul masail have the view that although the government recognises cryptocurrency as a commodity, it cannot be legalized under Islamic sharia law,” the East Java Nahdlatul Ulama branch wrote in an announcement, quoting chairman Kiai Azizi Chasbullah.
Over 200 million Muslim people live in Indonesia.
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