According to reports, the National Ulema Council has announced a ban on crypto use, citing Shariya law. Although the Indonesian government recognizes crypto as a commodity it cannot be legalized according to Islamic law.
According to reports, Asrorun Soleh, head of religious decrees stated that the rejection stems from the thesis of cryptocurrencies being riddled by “uncertainty and wagering and harm.” However the Chairman of MUI’s Fatwa Commission explained that digital assets could be traded as commodities if they comply with Shariah law, and have a clear benefit.
This announcement comes only a few weeks following a fatwa issued by the MUI East Java branch against crypto usage. The Islamic group had previously cited volatility.
After a minor pullback, Bitcoin has been able to regain its uptrend to $65k. Altcoins also remained strong. Although “fatwas”, which are formal rulings by qualified scholars on Islamic Sharia law, may create a feeling of uncertainty in the market, there is no immediate danger of a massive sell-off.
One, the market has shown tremendous potential and has remained afloat despite many FUDs. MUI’s decision to withdraw from government funding is not binding, even though it maintains the status of a government-funded entity and is Indonesia’s most important Islamic scholarly organization.
It is important to remember that Indonesia has a large Muslim population, approximately 237million, which equals more than 12% of all Muslims worldwide. The development could have a significant impact on Indonesia’s crypto ecosystem which has well over 4.4million investors.
Indonesian Crypto Climate
To generate revenue, Indonesian leaders had previously planned to tax capital gains from cryptocurrency trading amid the COVID 19 epidemic. The Commodity Futures Trade Regulatory Agency (the country’s tax agency) was also looking at tax imposition on crypto transactions on domestic exchanges.
Overall, Indonesia has not been hostile to crypto. Despite the 2017 blanket ban, the central bank declared Bitcoin and other crypto-assets not valid payment instruments. Trading was allowed even though.
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