Senior religious clerics in Indonesia have declared it haraam, or forbidden, for Muslims to use crypto assets as currency, according to Bloomberg.
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Indonesia’s National Ulema Council, the country’s topmost authority on religious affairs, said that Muslims could not trade cryptocurrency because it had elements of uncertainty and wagering. However, Asrorun Niam Sholeh, head of religious decrees, said that if cryptocurrencies could adhere to the tenets of Sharia law and benefit the public, there was a possibility it could become religiously permissible.
Although it is unlikely that cryptocurrency trading will halt in the world’s largest Muslim country as a result of the decree, the opinion may play a role in dissuading some Muslims from using popular cryptocurrencies like Bitcoin and Ethereum. The country hosts more than 12% of the world's Muslim population and is home to approximately 4.45 million crypto investors, according to BAPPEBTI, the country's commodity futures trading regulatory agency.
In January 2018, Indonesia's central bank said crypto was “not a legitimate instrument of payment." The country forbids cryptocurrency for payments, but still allows citizens to trade it as a commodity.
In recent months, amid crypto's growing popularity during the pandemic, the Indonesian government has even looked to levy taxes on the profits from crypto trading.
In the past, however, Indonesia's Financial Services Authority has highlighted crypto's price volatility as a reason to discourage investors from putting money into the industry, arguing that its underlying value was still undetermined.