In Indonesia, the National Ulema Council (Majelis Ulama Indonesia: MUI) has classified cryptocurrencies as partially haram. They contained “elements of insecurity, betting and harm,” said Asrorun Niam Sholeh, head of the religious ordinance department, on Thursday. The Council had previously held an official hearing of experts.
With the Haram classification, the MUI only refers to the use of cryptocurrencies as a substitute for money. Sholeh made it clear that crypto can be traded as a commodity or digital asset if it also complies with the principles of Sharia law and has a clear benefit. This is reported by Bloomberg.
Classification could at least slow down crypto adaptation
The MUI is the supreme authority for compliance with Islamic Sharia law in Indonesia. The country is home to the largest Muslim population in the world. The National Ulema Council does not have the rank of a constitutional body, but is consulted by the Ministry of Finance and the Central Bank on issues relating to Islamic finance. Other authorities also rely on the fatwas of the Islam experts.
Although the MUI does not completely reject crypto currencies, it could the decree discourage Muslims from investing in crypto assets. Financial institutions could rethink issuing crypto assets. To what extent the issuance of the digital CBDC, initially only envisaged by the Indonesian central bank, will be affected by the decree remains to be seen.
Islamrat follows central bank line
Outside the world of thought of the MUI leaders, the definition seems hardly comprehensible, even when using the logic of Islamic scholars. Because basically only the use of crypto currencies as money substitute would not tend to have the flaws described by the scholars. It is precisely the use as an asset that can mean “elements of uncertainty, betting and damage”.
In any case, the open interpretation should not lead to immediate damage to the crypto industry in Indonesia. Ultimately, with their decree, the Islamic scholars are only following the line of the Indonesian central bank, which had banned the use of crypto currencies as early as 2018 and once again made it clear last summer that it intends to take significantly stricter action against the use of crypto as a means of payment in the future.