Indonesia’s Ulema Council Prohibits Crypto Trading Under Sharia Law

The Indonesian Ulema Council (MUI), the country’s largest and biggest Islamic scholarly body has proscribed digital currencies for Muslims in the country, stating that it contradicts the core provisions of Islamic finance. 

The stance of the religious body came after a consultative forum of the council members held on Thursday, and models a similar position maintained by a smaller chapter of the Nahdlatul Ulama (NU) in East Java as reported by TheCoinRise earlier last month. The MUI chairman Asrorun Niam Soleh says the body’s decision was taken based on several factors.

“From the deliberations that have been determined there are three legal dictums, the first is the use of cryptocurrency as a legal currency is haram because it is gharar, dharar, and contrary to Law Number 7 of 2019 and BI Regulation Number 17 of 2015,” said Asrorun in the Ijtima Ulama forum. 

The body is particularly concerned about the risks, and uncertainties associated with the trading of cryptocurrencies. Additionally, the MUI also stated that crypto money as a commodity or digital asset is not legal to be traded. This position the body maintained saying digital currencies contain gharar, dharar, and qimar which in Islamic finance implies they are imbued with elements of risk, harm, and speculation, all of which are forbidden under Sharia law. 

In all, Asrorun said the fact that crypto-assets also have no physical forms also makes them unsuitable for trading per Islamic finance.

Potential Impact on Crypto Growth in Indonesia

Indonesia is one of the nations with the largest Islamic residents in the world and the position of the MUI can considerably reshape the perception of a majority of Muslim faithful in the country. While the Indonesian government has not come out to proscribe the nascent asset class, the industry and startups in the nation are growing at a fast pace.

As reported by TheCoinRise, Indonesia has often topped the chart as a major hotspot for rising interest in digital currencies in the world. Digital currency-affiliated startups in the nation are also receiving venture funding, as firms look to position ahead of the surge in demand for crypto-related activities in the country. 

Should the Muslim population take the MUI’s stance by the letter, the good growth of the digital currency ecosystem in Indonesia may be stumped, however, with the position not presented as a law, it is unlikely that many will give up the potentials of the revolutionary nature of digital assets by the decree.