The use and trading of cryptocurrencies is forbidden under Muslim law, according to Indonesia’s National Ulema Council, the Southeast Asian nation’s semi-official body of Islamic scholars who issue religious edicts.
The group — which receives funding from the Indonesian state but is not considered a government agency — deemed cryptocurrency haram, or banned under Islamic law, because it has elements of uncertainty, wagering and harm, Asrorun Niam Sholeh, head of religious decrees, said, according to Bloomberg.
However, if a given cryptocurrency is able to show a clear benefit as a commodity or digital asset, it would then abide by the tenets of Shariah law, the Islamic scholar added.
The decree was made after the council held an expert hearing, Bloomberg noted.
Indonesia’s central bank declared crypto an illegitimate instrument of payment in January 2018, but did not outright ban trading.
The council has a broad mandate to determine compliance with Shariah law in Indonesia, which is home to the world’s largest Muslim population — an estimated 231 million out of the country’s total population of about 270 million.
The various provinces in Indonesia embrace Shariah to different extents. Only Aceh province, for example, applies Shariah to criminal law — criminalizing pre-marital sex, the breaking of Islamic dress rules and other strict interpretations, which are punishable by public caning.
It’s unclear what kind of punishment — if any — would be doled out for trading cryptocurrencies, though the decree alone could discourage Muslims from participating in the burgeoning crypto scene.
The decree could also keep Indonesia-based banks from offering crypto services. Bank Indonesia, for example, has been considering rolling out a central bank digital currency, a kind of crypto that would be tied to the country’s traditional currency, which is the Indonesian rupiah.
Indonesia’s National Ulema Council has grown increasingly influential over the past couple of decades, with the country’s finance ministry and central bank consulting the group when it comes to Islamic finance issues, according to Bloomberg.
The council’s authority to regulate banking in the country was strengthened in 2008 with the passage of the Sharia Banking Law, which requires all Indonesian financial institutions to establish a financial division operating under Shariah law, according to the East Asia Forum.
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