Forbids Cryptocurrency, Allows Cryptoasset: Indonesia Islamic Authority

TheIndonesia.co - Indonesia’s Ulema Council (Majelis Ulama Indonesia or MUI), the country’s top Islamic body that holds the authority on Shariah compliance, has declared the use of crypto as a currency haram. While crypto as an asset is allowed.

Asrorun Niam Sholeh, head of religious decrees, explained Thursday, 11 November 2021, after the council held an expert hearing. The council decided cryptocurrency has elements of “uncertainty, wagering, and harm,” Antara reported.

“It doesn't meet the Shariah tenets, which are having a physical form, value, certainty, property rights, and can be handed over to the buyer," said Niam.

However, if crypto can abide by Shariah's tenets and can show a clear benefit, it can be traded as a digital asset or a commodity.
Indonesia, the world’s largest Muslim population country, has an estimated 231 million Muslims, which is 86.7% of the country’s population.

The council meeting was held in Jakarta for three days, discussing 17 issues including crypto, jihad, taxes, elections, and online lending. The council fatwa has no binding power to Muslims but the government or regulators usually listen to them.

Market Response

The public enthusiasm for investing in crypto assets is increasing day by day, as evidenced by the increasing transaction and the increasing number of registrants on many officially registered crypto exchanges in Indonesia. One of the exchanges is Indodax which has daily transactions reaching trillions of rupiah.

Indodax CEO Oscar Darmawan emphasized that crypto assets are not used as currency in Indonesia. "At Indodax itself, we trade many types of crypto assets, even the largest trading volume at Indodax comes from crypto assets that have physical assets as underlying assets,” Oscar said.

Regarding the underlying assets of the crypto, Oscar Darmawan explained that actually, almost all crypto assets have their underlying assets. For instance, Bitcoin. “Bitcoin has an underlying in the form of bitcoin mining fees for the verification process and bitcoin issuance which requires an electricity fee of 150 TeraWatt per hour, but it's purely digital. This is technological innovation. Now money doesn't have a physical form, it's just digital like e-money. So, because there is a production cost, Bitcoin doesn't just appear, so don't be surprised if the price of bitcoin keeps going up," Oscar explained.

Indodax has more than 4.5 million members with 99% of them being Indonesians who live from trading crypto assets. Indodax has 170 types of crypto assets.