While 2021 has proven to be one of the best years for the cryptocurrency market, the same doesn’t really apply to the asset itself. Yes, the crypto market has grown exponentially this year and some of the top cryptocurrencies have reached new peaks that they hadn’t previously. However, this widespread frenzy surrounding these digital currencies have also pushed governments across the world to establish a clear stance regarding them. One of the countries where these virtual currencies have found themselves in a grey area is Indonesia. Even though regulators have not issued any laws or statements as yet that declare the assets as illegal, the country’s religious leaders have gone ahead and declared all crypto assets as ‘haram’.
As per the guidance of the Sharia law, the use of cryptocurrencies has been banned by the National Ulema Council (MUI). Thus, even if the Indonesian government gives them the status of a commodity, it is not possible for these assets to be regarded as legal under the Islamic law. According to the report, cryptocurrencies have been rejected because these digital currencies are plagued with a number of issues, such as wagering, uncertainty and harm. However, the commission said that if these cryptocurrencies show ‘clear benefits’ and comply with Sharia laws, then it would be possible for people to trade them as a commodity.
Furthermore the MUI’s East Java branch also said that they had decided to issue a fatwa about these cryptocurrencies primarily because of the volatility they exhibit. The crypto market could be hit by a wave of uncertainty because of this recent ban that has been imposed by the Islamic religious council. Nonetheless, there haven’t been any major price dips immediately and Bitcoin is still holding onto the $64,000 mark. This reduction in selling pressure could be because of a fall in FUDs across the crypto market.
This may be possible because the decision taken by the MUI may not be considered legally binding, even though the Muslim council is undoubtedly an institution that’s funded by the government. But, it is still important to note that the majority of the Indonesian population identifies as Muslim. 12% of the global population of Muslims comes from Indonesia and this means around 237 million people. Hence, this latest crypto ban could have a major impact on the Indonesian crypto environment as a whole. As of now, cryptocurrencies remain in a grey area in the country because they are neither approved nor banned legally.
Earlier, legislatures in the country had made a proposal of apply a capital gains tax on all transactions related to cryptocurrencies. The financial markets’ regulator in the country had also considered imposing taxes on all crypto transactions being conducted on domestic exchanges. There was a ruling in Indonesia in 2017 in which the central bank in the country said that people could not use crypto for payment services. Despite this ruling, people are still engaging in crypto trading and it is permitted in Indonesia for now. Things could change in the future and there is a lot of uncertainty about it.
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