Indonesian Islamic body bans crypto as currency

Indonesia, the world’s largest Muslim majority country, bans the use of crypto as a currency, but investing in and trading the digital tokens is allowed in the commodity and futures markets.
The total value of cryptocurrency trading on the commodity exchange has reached 370 trillion rupiah ($ 25.96 billion) this year to May, according to the Ministry of Commerce.

Total trade at the end of 2020 was estimated at 65 trillion rupiah. The number of traders has reached 6.5 million from 4 million.

As a means of payment, cryptocurrencies are banned under sharia law because they carry elements of insecurity and harm, and are in violation of state laws, Asrorun Niam Sholeh, MUI’s head of religious decrees, told Reuters.

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Trading cryptocurrencies as a commodity is also illegal, and MUI compares it to gambling because it does not comply with Islamic rules, such as that the commodities must have a physical form, a clear value and a known exact amount, among other reasons, he said.

But MUI allows trading in cryptocurrencies that comply with Islamic rules, have an underlying asset and have clear benefits, Asrorun said.

The commodity exchange allows trading in hundreds of cryptocurrencies that meet the requirements for security and good governance of the blockchain system.

The MUI decree is not legally binding as it is not part of the government but its decision may influence investment decisions of some Muslims.

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