The National Ulema Council (MUI) has reportedly announced a ban on the use of crypto, citing Shariya law. Even as the Indonesian government has acknowledged crypto as a commodity, it still cannot be legalized under Islamic law.
According to the reports, the head of religious decrees, Asrorun Niam Soleh, stated that the rejection ignites from the thesis that cryptocurrencies are riddled with “uncertainty, wagering, and harm.” However, the Chairman of the MUI’s Fatwa Commission clarified that digital assets can be traded as a commodity if it obeys the Shariah law and shows a “clear benefit.”
The latest announcement comes just a few weeks after the MUI’s East Java branch issued a fatwa against crypto usage. The Islamic group had cited volatility as the primary issue.
A Threat to Bitcoin?
Bitcoin has managed to resume an uptrend to $65k after minor pullback. Altcoins, too, remained strong. While “fatwas” (formal rulings on the point of Islamic Sharia law given by a qualified legal scholar) may trigger a sense of uncertainty in the broader market, a case of massive sell-off may not transpire any time soon.
For one, the market has demonstrated tremendous potential of late and has remained afloat in the wake of many FUDs. Additionally, MUI’s decision is not legally binding even as it continues to enjoy the position of a government-funded organization and happens to be Indonesia’s top Islamic scholarly entity.
Having said that, it is also important to understand that the country has one of the largest Muslim populations in the world, with approximately 237 million, meaning over 12% of the world’s total. Hence, the development may have a considerable impact on the Indonesian crypto ecosystem, which hosts well over 4.4 million investors.
Indonesian Crypto Climate
Amid the raging COVID 19 pandemic, Indonesian leaders were earlier planning to levy tax on capital profits from cryptocurrency trading to induce revenue. The Commodity Futures Trade Regulatory Agency of the country was also considering tax imposition on all crypto transactions on domestic exchanges.
All in all, Indonesia’s stance on crypto has not been very hostile. Despite instances such as a blanket ban in 2017, the central bank deeming Bitcoin and other crypto-assets as not legitimate payment instruments the very next year, trading was still permitted.