On Thursday, November 11, Indonesia's National Ulema Council (MUI) declared that cryptocurrency is haram or forbidden. Asrorun Niam Sholeh, the MUI's head of religious decrees, explained that cryptocurrencies constitute uncertainties in their use and behave like wagering.
Indonesia's National Ulema Council is a body of Islamic scholars with significant influence in the country with the largest Muslim population. The council advises the government, which includes guiding Indonesia's finance ministry in finance and banking matters and its adherence to Sharia law.
Cryptocurrency is currently being traded as a commodity in Indonesia, with trades between January to May 2021 reaching $25.96 billion, according to Indonesia's finance ministry. However, the Indonesian government does not officially recognize the buying power of cryptocurrencies, citing that Rupiah is the only legal tender in the country.
Shoelh said the current cryptocurrency trading is allowed as long as there are "underlying assets and carry clear benefits." They also allow cryptocurrency trading for exchanges that follow the "safety and good governance of the blockchain system," Shoelh added.
The council of Islamic scholars is very influential to Indonesia's government and the Muslim investors, despite not having any legal authorities. The council's new ruling may affect financial and investment decisions by some Muslims.
Despite the council's latest announcement, the Indonesian government has been supportive of cryptocurrencies. The central bank of the country, Bank Indonesia, has been planning to create a digital currency but has not announced any official plans.
Other Muslim-majority countries have not been critical of cryptocurrencies. Bahrain, another Muslim majority country, has supported cryptocurrencies since 2019. The United Arab Emirates has allowed cryptocurrency trading in Dubai.