Indonesia’s National Ulema Council recently deemed cryptocurrency as haram and unlawful for Muslims. The body advises the Indonesian finance ministry and central bank on financial matters in accordance with Islamic law.
The council’s head of religious decrees, Asrorun Niam Sholeh said crypto contains elements of uncertainty and harm. Such elements forbid it as a payment option under Sharia law.
Sholeh also added that since digital tokens lack a clear value and physical structure, their trade as a commodity is forbidden. Interestingly, he said that if cryptocurrency can abide by Sharia tenets and show a clear benefit, then it can be traded.
Pertinent to note, the decision is not an official decree so it does not ban cryptocurrency trading in Indonesia. However, it will affect how Muslims in Indonesia view cryptocurrency in the future. The decree could deter Muslims from investing in the assets and make local institutions reconsider issuing crypto assets.
I'll leave the theological explanation to clerics. But on moral grounds, crypto:
♦︎ Fuels #ClimateCrisis.
♦︎ Facilitates #ransomware attacks.
♦︎ Is a pyramid scheme which serves no legitimate purpose. https://t.co/AMQIszTTkm
— Jonah Blank (@JonahBlank) November 11, 2021
Indonesia doesn’t allow the use of crypto assets as a form of currency, as the rupiah is the only legal tender in the country. However, the government itself supports crypto assets, allowing its trade as an investment option. According to reports, the Indonesian government also aims to set up a crypto-focused exchange by the end of the year.
The stance of Indonesian religious leaders may differ from their counterparts in other Muslim-majority countries. For example, UAE and Bahrain both allow crypto trading. Similarly, Thailand’s largest bank recently bought into the country’s biggest crypto exchange.
Cryptocurrency in Pakistan
In 2018, the State Bank of Pakistan (SBP) warned banks against using virtual currencies like Bitcoins, Lite Coin, Pakcoin, etc. as legal tenders. However, recently, owing to crypto currency’s global popularity, SBP Governor Raza Baqir said the central bank is studying cryptocurrencies and their potential for bringing transactions happening off the books into a regulatory framework.
Furthermore, the Sindh High Court directed the federal government to regulate cryptocurrencies within three months. The court directed the government to form a committee headed by the federal secretary of finance to determine the legal status of cryptocurrencies.