Indonesia’s religious council has deemed the use of cryptocurrency as haram, or banned, for Muslims, as reported by Bloomberg.
The National Ulema Council, Indonesia’s top Islamic scholars body, which receives funding from the state, said using crypto assets as a currency is forbidden for Muslims, according to the report.
The council is often consulted on Shariah compliance in Indonesia, home to the world’s largest Muslim population.
Indonesia has seen a vibrant scene related to crypto. An August report by DappRadar showed that interest in non-fungible tokens had come mainly from the United States and Indonesia.
Last year, the total value of crypto transactions in Indonesia was 64.97 trillion rupiah (US$4.6 billion), but between January and May 2021, it was 370.4 trillion rupiah (US$26 billion), according to the head of the country’s futures trading regulator.
In the world’s most populous Muslim majority country, religion adds another layer of complexity. Some 86% of Indonesians are Muslims, making Shariah compliance and Islamic principles important issues in their potential mass adoption — issues upon which the country’s Ulema Council now appears to weigh in.
“The idea that [crypto] is now illegal in one of the world’s most populous and poorest nations is heartbreaking. And that’s because the Shariah council and people on the ground making decisions there may not have a better understanding, or enough understanding about safety nets,” said Farah Jaafar, CEO of the Labuan IBFC, in a panel discussion on “Digital Assets Regulation: What’s Next,” during the SG Blockchain Day 2021 virtual conference organized by the Blockchain Association Singapore.
In the meantime, while trading crypto is not illegal in Malaysia, which also houses a huge Muslim population, the authorities appeared to hold a strong grip on compliance for crypto exchanges. Binance, for example, was banned there in late July for compliance issues. Also in July, in a viral video, Malaysia police — operating a steamroller — flattened over 1,000 crypto mining machines that had been operating on stolen electricity, according to local media reports.
Kazakhstan, with estimates of over 70% of the country’s population being Muslim, became a sought-after destination for Chinese crypto miners following China’s clampdown on the sector. However, power had been rationed recently in Kazakhstan, and the nation’s energy minister has proposed to cap the nationwide total electricity consumption for new crypto miners seeking technical permissions to connect to the power grid.
Read more: Indonesian regulators play catch-up as crypto investment soars
Michelle Lim contributed to this report.