Indonesian Religious Council Says Crypto is Forbidden

The group regards the speculative nature of cryptocurrency as problematic — a subject of some debate in other Muslim-majority countries.


Al-Akbar Mosque in Surabaya, Indonesia, second-largest mosque in the country; Source: Shutterstock


key takeaways

  • The National Ulema Council of Indonesia, the world’s largest Muslim-majority country, has declared that cryptocurrency is incompatible with Islamic Finance
  • The ruling doesn’t make crypto illegal in Indonesia, where there’s an enthusiastic retail market and institutional investment to improve efficiency or remittances, but it might deter some Muslims

Indonesia’s national religious council has declared cryptocurrency to be haram, or forbidden to be used by Muslims, as it is incompatible with Islamic Finance, according to a statement released Thursday. First reported by Bloomberg, the National Ulema Council of Indonesia, or MUI, has declared that cryptocurrency’s speculative nature is to blame.

Asrorun Ni’am Sholeh, head of religious decrees, said that cryptocurrency has “elements of uncertainty, wagering and harm” and therefore is forbidden to be used by Muslims. 

Islamic Finance has strict prohibitions against certain types of financial instruments that are otherwise normal in other markets. The two pillars of prohibition are based upon the avoidance of riba (usury) and gharar (deception). For example, interest is heavily regulated; institutions that loan also need to be prepared to bear some of the losses of the borrower should their enterprise go south. Certain types of insurance are also prohibited, as are derivative products. 

It should be noted that the decisions coming from the MUI are not legally binding — officially Indonesia is a state where religious pluralism is enshrined in law — but they may deter Muslims in the country from investing in crypto. There’s also some considerable debate on the topic.

“A comprehensive Islamic interpretation, one that sparked a massive rise in Muslim investment in Bitcoin and Ethereum in 2018, was provided by Sharia advisor Mufti Muhammad Abu-Bakar (former advisor to Blossom Finance) who argued that Bitcoin is permissible under Shariah law,” wrote UK-based Islamic equity crowdfunding platform Qardus earlier this year. “He considered arguments that crypto itself was speculative, but his view was that all currencies have a speculative element and this did not automatically deem crypto as haram.” 

Officially, the Indonesian government is quite supportive of the development of digital assets and blockchain technology. 

The Rupiah Token, a stablecoin backed by the country’s local currency, the Indonesian Rupiah, has been given a regulatory green light. As Blockworks previously reported, major Indonesian banks are working on reducing friction and costs for the billions of remittances the country’s migrant workers send back every month. BRI Ventures, a subsidiary of Bank Rakyat Indonesia, is an active investor in Ripple’s xCurrent and is working with Singapore-based FinTech Nium to develop an API that can be deployed to the nation’s smaller, regional banks. 

PT Bank Negara Indonesia, a state-backed bank, has been working with J.P. Morgan on Confirm, a blockchain-based tool to expedite wire transfers, and has deployed it on a payment corridor between Taiwan — where 250,000 Indonesian migrant workers reside — and Indonesia. 

MUI did not respond to Blockworks’ press queries about the compatibility of stablecoins and DeFi with Islamic Finance by the time of publication.

Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg


In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.


BUZZ holds shares of Coinbase, Robinhood and MicroStrategy


Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile


The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally


While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders


Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume


DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit