The National Ulema Council (MUI), Indonesia’s top Islamic scholarly body, has declared cryptocurrencies forbidden (haram) for Muslims, according to the tenets of Islam.
The juristic basis of this ruling, according to the scholars, is that cryptocurrency has elements of uncertainty, wagering and harm.
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, Bloomberg reported.
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Indonesia’s National Ulema Council has banned the use of cryptocurrency claiming that it goes against the tenets of Shariah law. AFP via Getty Images
Though the MUI gets funding from the Indonesian government, but it is not considered a government agency and its ruling is not binding.
The government itself has been supportive of crypto assets, allowing it to be traded alongside commodity futures as an investment option and pushing to set up a crypto-focused exchange by the end of the year. Indonesia doesn’t allow the use of crypto assets as a form of currency, as the rupiah is the only legal tender in the country.
Indonesia’s central bank declared crypto an illegitimate instrument of payment in January 2018, but did not outright ban trading.
Controversial
Crypto transactions amounted to 370 trillion rupiah ($26 billion) in the first five months of the year in Indonesia, still a fraction of the global market at around $3 trillion.
According to Prof. Dr. Monzer Kahf, Bitcoin and other cryptocurrencies are not money because they are not recognized as legal tender (obligated on a society by a formal government).
Once a formal government accepts virtual currency as a legal tender, it will then be accepted as money. But until then, it is simply another virtual thing that we cannot consider as currency even if a group of people own and trade it.
For more on cryptocurrency in Islam, please check.
How Does Islam View Bitcoin and Other Cryptocurrencies?