Bad news for crypto markets. According to Indonesia’s National Religious Council, cryptocurrencies don’t follow Sharia tenets and should not be used by Muslims. This decision challenges the future of the crypto markets in the country that houses the largest Muslim population.
This will undoubtedly have a spillover effect in other Muslim countries. Islam is the second most widely practised religion in the world, with an estimated 1.8 billion followers worldwide.
This year has been interesting for cryptocurrencies. It has faced its ups and downs. Some have embraced the crypto markets, like the country of El Salvador, while other countries and regulators have taken the opposite approach, like China.
Indonesia has joined the group of countries that have or will reject cryptocurrencies. According to Asronun Niam Sholeh, the head of Fatwa or religious decrees at the Indonesian Ulema Council, cryptocurrencies like Bitcoin are “haram”. In other words, these financial instruments are forbidden for practising Muslims.
In a special hearing regarding this issue, Sholeh deemed that cryptocurrencies have elements of uncertainty, wagering and harm and therefore go against the central tenets of Islamic law. The national Ulema Council decides on Sharia compliance in Indonesia and it is often consulted by the country’s Finance Ministry and Central Bank on Islamic financing issues.
While this decision isn’t an official government decree nor does it ban cryptocurrency trading in Indonesia, it does have far-reaching implications on whether Muslims will feel comfortable trading the asset in Indonesia and it will influence the take-up of cryptos by local institutions. Most experts believe that the regulatory institutions in Indonesia will follow with the decision made by the Indonesian Ulema Council.