Despite the government’s support of trading and taxing cryptocurrency, the ruling that it is "haram" could deter many of the country’s 230 million Muslims.
Indonesia's religious council has declared trading cryptocurrency haram, or forbidden under Shariah law.
Bloomberg reported on November 11 that the National Ulema Council, or MUI, banned Muslims from trading cryptocurrency “as it has elements of uncertainty, wagering, and harm.”
However, the ruling has some wriggle room, according to Niam Sholeh, head of religious decrees, Bloomberg reported. If the cryptocurrency is used as a commodity or digital asset and can meet Shariah's doctrinal requirements — and can show it has a clear benefit — then trading would be permissible, he added.
The MUI's ruling does not have the force of law, Bloomberg said, although it will likely deter traders, as well as giving local companies pause before issuing cryptocurrencies.
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Government Support for Crypto
That said, the government has encouraged cryptocurrencies, allowing them to be traded as commodities since 2018. In 2019 it created a legal framework for trading, and in 2020 regulations for local cryptocurrency exchanges such as Indodax and Binance-backed Tokocrypto. Many major exchanges — including Binance, Coinbase, Kraken, and Bittrex — also serve the country.
In May, Reuters reported that Indonesia's government was considering a tax on cryptocurrency trading. The government has banned using crypto as payment.
More than 85% of the 275 million people in Indonesia are Muslim, according to the U.S. Census Bureau. It is also the world's fourth-largest country, after China, India, and the United States.
Given that China recently banned its 1.4 billion citizens from trading in cryptocurrencies, the two countries make up about 20% of the world population. And while India is moving away from earlier indications it would ban cryptocurrencies, if the anti-crypto Reserve Bank of India gets its way, another 1.34 billion people would find crypto officially off-limits. That would make 38% of the world's 7.8 billion people banned from trading cryptocurrencies.
