Indonesia, the largest Islamic country in the world, bans crypto trading

[ad_1]

This comes as no surprise to many, as Islamic companies have been known to label cryptocurrency trading as a form of “Haram”. In the past, many Islamic organizations have condemned the trading of digital assets such as cryptocurrency and even non-fungible tokens. Recently, the Tarjih and Tardid Council of Muhammadiyah also released a similar memorandum stating that “Tarjih’s fatwa states that cryptocurrencies are illegal both as an investment tool and as a medium of exchange” . A fatwa implies that the currency is labeled as illegal for the community.

The particular Islamic organization, the Council of Tarjih and the Central Executive Tajdid of Muhammadiyah precisely provided a few arguments that validated this particular decision. The Islamic council has declared that the use of cryptocurrencies is illegal or unlawful as it represents ‘gharar’ and ‘dharar’. Both of the aforementioned terms essentially refer to cryptocurrencies that carry elements of “speculation”. The fatwa quoted “This speculative nature and gharar is prohibited by Sharia as the word of God and the hadith of the Prophet SAW and does not meet the values ​​and benchmarks of business ethics according to Muhammadiyah.”

The explanatory argument presented in the fatwa

The Fatwa mainly provided two crucial points of contention, the most important being the speculative and volatile nature of the asset. The other problem with cryptocurrencies is that the asset does not meet the standards of Islamic barter, i.e. the medium of exchange. The unreliability of the crypto has therefore been condemned by the Islamic Council.

Related Reading | HIFO: The Tax Loophole That Could Help Bitcoin Investors This Tax Season

The Council also expressed concerns about the legitimacy of the currency, as bitcoin and other cryptocurrencies have still not been recognized as money or a medium of exchange backed by an underlying asset such as gold. . The Islamic fatwa underscores these ideas that since crypto is a dynamic asset, it cannot be considered a viable investment.

Any asset subject to speculation and fluctuations will be considered “Haram”. The other principles also point to illegal activities that are carried out using cryptocurrencies. The digital asset also tends to be used for gambling purposes, moreover crypto is not a tangible asset, which makes it another reason why the Islamic community prohibits the same.

The growth of the crypto industry has attracted a lot of negative attention | Source: TOTAL-CRYPTOCAP on TradingView.com How does the fatwa affect cryptocurrency trading in Indonesia

The Ulema Council of Indonesia (MUI) previously insisted on a similar ban last November. The MUI, however, remained open to accepting cryptography if it adheres to Sharia principles. The other Islamic organization that declared the cryptocurrency “Haram” was Nahdlatul Ulama, making Muhammadiyah the third most prominent Islamic organization to label the asset the same. Sharia encompasses the idea that the digital asset should be a commercial good and not just a form of investment and transaction. The Commodity Futures Trading Regulatory Agency has decided to look into the same, hence suggesting that cryptocurrency trading will continue to operate in Indonesia.

Related Reading | European market regulator urges EU to ban bitcoin mining with proof of work

Indonesia has faced a few bans recently due to religious concerns, although the same Indonesian market is optimistic about crypto adoption. Crypto transactions increased in the country and saw almost $9.8 billion in asset transactions. This development signaled that in 2021, there was a 1,222% appreciation in numbers compared to 2020.

In line with the same, there would have been 11.2 million crypto investors at the end of last year, which again represents a massive jump of 180% from 2021. Therefore, it is prudent to conclude that another fatwa will not tarnish the popularity of the asset. among Indonesians.

Featured image from iStockPhoto, Charts from TradingView.com

[ad_2]