Who would have thought dealing with crypto could face religious discrimination? And yet, here we are: Bitcoin is banned for Muslims. Here’s how it happened
Indonesia’s national council of religious leaders has declared crypto haram, or forbidden. The National Ulema Council (MUI) held an expert hearing to discuss crypto and related issues. As reported by Bloomberg, the head of religious decrees Asrorun Niam Sholeh said there are elements of uncertainty, wagering and harm, associated with crypto assets. Therefore, it goes against Islamic law to deal with this financial instrument.
The MUI ruling is not an official decree. So far, no trading ban has been introduced by the national legislators. Nevertheless, the opinion of the National Ulema Council has great importance for all religious people in the country. Thus, such an announcement will very likely have a significant impact on crypto-assets usage in the world’s largest Muslim country.
Indonesia boasts the world’s largest Muslim population. The country is home to an estimated 231 million Muslims. This is 86.7% of the Indonesian population in general and nearly 13% of the global number of Muslims.
The MUI holds the authority on Shariah laws in Indonesia. Those laws are interpretations of the Islamic sacred scriptures. They prescribe how Muslims should live their lives in accordance with God’s will. Sharia law applies to all socio-economic spheres, assigning actions to one of five categories: mandatory, recommended, neutral, abhorred, and prohibited. The last category defines actions as sinful and immoral. From now on, Bitcoin trading in Indonesia is also deemed as such.
Although the MUI is not a legislative body, the Indonesian finance ministry and the central bank reportedly have to consult them on all issues related to Islamic finance. Moreover, all fintech startups operating in the country must present their apps and products before the MUI for Sharia certification.
Since the late 1990s, Indonesian politics shifted toward Islamic conservatism. Therefore, the council’s influence has grown, according to Syafiq Hasyim, a Jakarta-based scholar of the MUI and the political economy.
In November 2019, Vice President Ma’ruf Amin declared the “Shariatisation” of the economy a priority for the country’s development. It means, the government aims to incorporate Sharia not only into the legal and public sphere, but also deeply embed it into the economic system. This year, the Vice President confirmed the potential of the halal industry goes hand in hand with the potential of the national sharia finance industry. As “halal” (permissible) trends are on the rise, crossing crypto out of that category practically means an unofficial ban.
In Islam, money (wealth) is property owned by men as Allah’s vicegerents. It should be carefully used and invested in line with Shariah. In contrast to capitalist philosophies, money has a “social function” in Sharia finance, and it should be invested to achieve socio-economic justice for the benefit of the entire society. Anything of inherent worth, as long as its value does not fluctuate erratically or unpredictably, can be termed as a currency in Islam.
When it comes to Bitcoin and other cryptocurrencies, scholars’ opinions have been divided so far. MUI’s ruling is the first on the matter. It may become a precedent for other Islamic countries.