On Tuesday, one of Indonesia’s largest religious organizations issued a decree that forbids the use of cryptocurrencies. The Tarjih Council and the Central Executive Tajdid of Muhammadiyah claimed that the use of cryptos was immoral and against the tenets of Islam.
The religious body was added to the list of clerical bodies in Indonesia to have declared their oppositional stance to cryptocurrencies and prohibited their followers from using them as a form of exchange.
They cited the speculative nature of cryptocurrencies as a reason for their Fatwa. They claimed this feature of Gharar made the trade of cryptos unlawful (haram). ‘Gharar’ in this context indicates risk, hazard or objects based on chance.
In addition, they supported their declaration by stating that Islamic standards regarding trade required the medium to be acceptable by parties involved, which cryptocurrencies do not have.
Indonesia, the most populous country with a majority of Muslims (with over 85% of the population as Muslims), has always been influenced by clerics: the highest body on clerical matters declared cryptos as forbidden instruments 2 months ago.
Crypto has a history with Indonesia. Back in 2017, the Central Bank banned the use of cryptos for payment but allowed the trade to continue, joining the League of Nations that had full or partial restrictions on crypto.
Less than six months ago, the Minister of Trade reiterated that there wouldn’t be an outright ban on cryptos, but tighter regulations.
However, there were reports last month of the proposed adoption of a digital currency to ‘tackle’ the crypto trade in the country. Analysts can view the recent denouncement by religious bodies as a ploy to play to the religious sentiments of the populace, to weaken the spread of crypto. However, some already believe it is “haram” to trade crypto like the man below:
None of these ordeals has deterred the march of crypto in Indonesia. According to the Indonesian Blockchain Association, there are up to 2.2 million crypto traders in the Asian archipelago. This speaks to the prominence of cryptos and the level of acceptance among Indonesians, and further strengthens the claim that Asians represent the largest demography of crypto traders.
This was one reason why the world’s largest crypto exchange, Binance, wanted to launch an exchange in the country last month.
What does this mean for the crypto world?
Although state institutions have been finding it difficult to regulate or restrict cryptocurrencies, they have not escaped the attention of religious lawmakers, and the influence of religious institutions have in third-world countries can not be denied. Such countries are usually socio-politically conservative, and this conservation has been a stumbling block to the global acceptance of cryptos.
This isn’t unexpected because of the magnitude of change that blockchain technology sweeps along with it, and humans are not comfortable with change.
Furthermore, the potential loss of power by highly centralized institutions (like commercial banks, the government, etc) due to decentralized finance, has made a lot of enemies for cryptos.
However, my closing thoughts are that this is only a temporary rejection because change is constant and in a couple of decades, cryptos will have completely permeated the fabrics of all societies. You can find some countries that might likely adopt cryptos soon here.