Indonesia is one of the countries where cryptocurrencies are in a grey area. While regulators have yet to issue any serious laws declaring cryptocurrencies illegal, religious leaders have stated that all crypto transactions are Haram.
The National Ulema Council (MUI) has banned the use of crypto under the guidelines of Sharia law. Therefore, these assets cannot be declared legal under Islamic law even if they are approved by the Indonesian government to be a commodity.
Indonesian religious leaders reject crypto
The report states that the rejection of cryptocurrencies stems from the fact that cryptocurrencies are plagued by issues such as “uncertainty, wagering and harm.” However, the commission has also stated that cryptocurrencies could be traded as a commodity if they comply with Sharia law and show “clear benefits.”
Another commission, MUI’s East Java branch, has also stated that the volatility of cryptocurrencies was the reason behind issuing a fatwa. The recent ban of cryptocurrencies by the Islamic religious council could trigger a wave of uncertainty across the market. However, major price dips are yet to be established, as Bitcoin holds strong at the $64K levels.
The lack of selling pressure could be attributed to a reduction in FUDs across the market. This could be because the decision issued by the MUI could fail to be legally binding even if the Muslim council continues to enjoy being a government-funded institution.
Nevertheless, the majority of the Indonesian population is Muslim. The country accounts for 12% of the global Muslim population, which is around 237 million people. Therefore, with the recent ban, the Indonesian crypto environment could be largely affected.
Crypto regulations in Indonesia
As aforementioned, cryptocurrencies in Indonesia fall under a grey area where they are neither banned nor approved. Legislatures in the country had earlier proposed a capital gains tax on crypto transactions. The country’s financial markets regulator had also considered imposing taxes on all crypto transactions on domestic exchanges.
Crypto trading is still permitted despite a 2017 ruling where the country’s central bank stated that cryptocurrencies could not be used for payment services.
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