The Indonesian Council of Religious Leaders has ruled that cryptocurrencies are forbidden for Muslims, introducing yet another variance to the Islamic view on digital assets.
According to Asrorun Niam Sholeh, head of the country's religious decrees, following the National Ulema Council's expert hearing on Thursday, cryptocurrencies have aspects of wagering and harm.
He stated that cryptocurrencies as a commodity or digital asset could be exchanged if they adhere to Shariah teachings and provide a demonstrable advantage.
MUI is the Shariah compliance authority of the world's most populous Muslim country, with the finance ministry and central bank advising them on Islamic finance matters.
Indonesia has backed crypto assets, allowing them to be traded alongside commodities futures as an investment alternative and pushing for the establishment of a crypto-focused exchange by the end of the year.
The usage of crypto assets as a form of currency is not permitted in Indonesia, as the rupiah is the country's only legal tender.
While the MUI ruling does not rule out the possibility of all cryptocurrency trading in Indonesia, it may discourage Muslims from investing in the assets and cause local institutions to reconsider issuing crypto assets.
Bank Indonesia has been considering a central bank digital currency but has yet to make a final decision.
In Indonesia, cryptocurrency transactions totaled 370 trillion rupiah ($26 billion) in the first five months of the year, a small part of the $3 trillion global market.
Indonesia's religious leaders' views may differ from those of religious leaders in other Muslim-majority countries.
The United Arab Emirates' free zone in Dubai now allows crypto trading, and Bahrain has backed crypto assets since 2019.
The Indonesian government is pro-crypto, enabling residents to trade cryptocurrencies alongside commodities as financial possibilities.
By the end of the year, the government hopes to have a crypto-focused exchange up and running. Finance authorities, on the other hand, do not recognize cryptocurrencies as legal money, instead classifying them as commodities and digital assets.
Following the surge earlier this week, the crypto market has retraced. Bitcoin is trading just below $65,000 at the time of writing, down more than 4% in the last 24 hours.
The market is currently correcting after the leading cryptocurrency achieved an all-time high above $69k earlier this week.
Bappebti, Indonesia's commodity futures trading authority, said there were approximately 4.5 million cryptocurrency investors in the country in May.
