Indonesia’s top Islamic scholarly body has banned Muslims from using Bitcoin. Why?
Indonesia’s main Islamic scholarly body, the National Ulema Council (MUI), has declared Bitcoin a “haram”. Consequently, it is now a forbidden phenomenon that goes against the basic principles of Islam. Asrorun Niamh Sholeh, chairman of MUI’s Fatwa Commission, has confirmed the religious authority’s rejection of cryptocurrencies due to alleged elements of “uncertainty, lending and harm”. We recount the developments in more detail.
Note that cryptocurrencies are inextricably linked to speculation, that is, the desire to make money from changes in the price of the asset. In this regard, the religious world does not always approve of what is happening to the digital asset niche and criticises it.
However, in Iran, where the vast majority of the population is Muslim, there is more interaction with cryptocurrencies. In particular, coin mining is officially allowed there, and a license must be obtained. Failure to do so could result in the seizure of mining equipment and a fine as well. We learned of a similar scenario the day before. According to sources, 227 pieces of mining equipment were taken away from local residents in a week alone.
Religion vs Bitcoin
According to Sholeh, for cryptocurrency to become a permissible activity in the lives of Muslims, it must be subject to Sharia law, i.e. bring “clear benefits” to the Muslim world. MIU members discussed Bitcoin during its recent meeting, which aims to address some of Indonesia’s biggest social, political, economic and legal problems through the lens of Islamic law.
MIU’s East Java branch issued a fatwa, that is, a formal ruling or interpretation on an item of Islamic law from a qualified jurist regarding Bitcoin with a ban back in late October. And although MIU is a state-funded organisation, the council’s latest decision is not legally binding. That is, the fatwas are essentially not official law, reports Cointelegraph.
Indonesia’s National Ulema Council
In other words, it is officially possible to invest and trade in crypto in Indonesia. However, the MIU’s decision may be heeded by the country’s Muslims. They make up the majority of the population – almost 86 percent – which means bans by the official Muslim religious body are able to significantly reduce capital injections into the crypto market from Indonesia.
Flag of Indonesia
The country’s government has so far maintained a neutral stance on the development of digital assets. Despite attempts to ban crypto in 2017, Bitcoin trading remains legal in Indonesia’s jurisdiction. In addition, local crypto exchanges receive relatively large investments from large investors.
In addition, investors are using peer-to-peer cryptocurrency buying platforms like the already familiar LocalBitcoins. We checked for an update: local currency trading volumes in the country are relatively small, but they are there anyway.
Trading volume on the LocalBitcoins platform in Indonesian rupiah
We believe this event is unlikely to affect active cryptocurrency users, as the fresh guidance is advisory in nature. However, the overall scenario of capital outflows from the blockchain world thanks to this country is still possible. So it is left to observe the situation here and draw certain conclusions if anything happens.
Stay tuned for more interesting news in our millionaires’ crypto-chat. There we will talk about other additional topics that affect the world of blockchain and decentralisation.
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