Indonesia wants to regulate cryptocurrencies but Islam bans them

After the financial crisis unleashed by the Covid-19 pandemic, the Indonesian Commodity Futures Trade Regulatory Agency considered the creation of an income tax towards the crypto market, to generate income to the state from the adoption growth. However, the position of Islam radically changes the matter.

The National Council of Ulema (MUI) – a sort of center for Islamic scholars – announced that cryptocurrencies such as bitcoin (BTC) and altcoins are considered “haram”, a term used to refer to everything that is forbidden or sinful. The body cited Shariya law (based on the Qur’an) and, although the government recognizes digital assets as merchandise, they still do not consider it legitimate.

Asrorun Niam Soleh, head of religious decrees, assured that cryptocurrencies are characterized by “uncertainty, gambling and damage.” Regardless, not all doors appear to be closed for digital assets – MUI’s Fatwa Commission chairman slipped that they could be traded as long as they obey Islam and the benefit of that operation is evident.

The influential Indonesian Ulema Council (MUI) issued a fatwa – a religious decree – on the bitcoin, increasingly used in this Southeast Asian nation as in other parts of the world.

Fettuas have no legal value in the country of 270 million inhabitantsBut this decision could deter Muslims from using cryptocurrencies.

Cryptocurrencies as digital goods or assets are illegal because they include elements of uncertainty and are harmful, “the head of the MUI’s religious decrees, Asrorun Niam Sholeh, told AFP.

“It’s like playing games of chance,” he added, noting that cryptocurrencies are virtual means of payment and that their value can vary considerably, making them contrary to Islamic law.

As a result of these judgments, there are some doubts about how the market will react in the next few days. Specialists believe that the measure will not break the strength that the price of bitcoin has taken above $ 60,000, but there is a special concern about what may happen to investors from Indonesia.

The Asian country is currently home to more than 4.4 million crypto investors, and has more than 230 million Muslims, so their considerations have an almost direct impact on government decisions.

Cryptocurrency transactions rose to the equivalent of 370 billion rupees (about $ 26 billion) during the first five months of 2020, Commerce Minister Muhamad Lutfi stressed in June.

For his part, Central Bank of Indonesia indicated that you plan to create your own cryptocurrency.

In 2019, the local branch of the Aceh Province Council of Ulemas published a fatwa against the ultra-popular but violent video game PlayerUnknown’s Battlegrounds (PUBG), fearing it would spark real-life riots. More recently, the MUI banned lending in line, but considered that vaccines against Covid-19 were allowed by Islamic law, although they may contain pork derivatives.

(With information from AFP)

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