Indonesia’s most acclaimed Islamic scholarly body, the Majelis Ulama Indonesia (MUI) has spoken against the engagement with digital currencies for Muslims in the country as it says the nascent asset class is haram, a similar position held by a smaller religious group as reported by Blockchain.news.
According to CNBC Indonesia, the Majelis Ulama Indonesia came up with this verdict after the Ijtima Ulama consultative forum, with the MUI Chairman, Asrorun Niam Soleh, noting that the decision was taken for a number of reasons.
“From the deliberations that have been determined there are three legal dictums, the first is the use of cryptocurrency as a legal currency is haram because it is gharar, dharar, and contrary to Law Number 7 of 2019 and BI Regulation Number 17 of 2015,” said Asrorun in the Ijtima Ulama forum.
Under the provisions of Islamic finance and within the context of digital currencies, “gharar,” “dharar,” and “qimar” imply that cryptocurrencies are susceptible to a high level of risk, harm, and speculations, all of which have no roots under the Sharia law.
Adding to the number of reasons why cryptocurrencies are not permissible for Muslim faithful, Asrorun said digital assets do not have a physical backing, and have no real value, making it not an ideal candidate to meet the syar’i sil’ah requirements. Despite the positions of the MUI, the body still acknowledges the legality of digital currencies as assets that can be traded as commodities. This new positioning reflects its values in which it is not enforcing its stance on its members nationwide.
Nonetheless, the Ulema Council’s proscription of digital currencies may reshape the mindsets of some Indonesians who follow religious enactment to the letter. Indonesia is home to more than 250 million Muslims, some of whom may steer clear of investing in cryptocurrencies moving forward. With the country known as a very favorable hub for crypto activities with 1 in 9 citizens holding digital assets, the MUI proscription can impact this growth negatively.
The stance of the MUI is however not a global inclination of Islam toward digital assets as there are Muslim entities who sanctions and takes donations in cryptocurrencies.
Image source: mui.or.id