Originally published 2021-11-13.
In November 2021 the Indonesian Ulema Council (Majelis Ulama Indonesia, or MUI), the country's leading body of Islamic scholars, issued a fatwa saying that using cryptocurrency as money is haram, meaning forbidden under Islamic law. The ruling made international headlines because Indonesia has the largest Muslim population in the world and a fast-growing crowd of crypto traders.
The short version: the fatwa is religious guidance, not a law. It treated crypto as unacceptable as a currency, while leaving room for crypto assets that meet strict Islamic conditions to be traded. The Indonesian government kept crypto trading legal and regulated, and it remains so today. Here is what the council decided, why, and what it changed in practice.
What the MUI decided in November 2021
The ruling came out of a gathering of the council's fatwa commissions held on Thursday, 11 November 2021, and was announced by Asrorun Niam Sholeh, the MUI official in charge of religious decrees. Reporting by AFP and Bloomberg the next day summarised it in a single line: crypto is forbidden for Muslims.
Sholeh explained the reasoning in terms familiar from Islamic finance. According to AFP, he said digital currencies were unlawful for trading because they have elements of uncertainty, wagering and harm.
He added that crypto is not a tangible asset, that its price can swing wildly, and compared speculating on it to placing a bet.
Those three words map onto classic legal concepts. Gharar refers to excessive uncertainty in a contract, maysir or qimar to gambling, and dharar to harm. Contracts that contain these elements are generally considered invalid by Islamic jurists, which is why the council reached for them.
Currency versus commodity: the detail most headlines missed
Many reports said the council had banned all crypto activity. Indonesian coverage was more precise. Detik Finance reported that the MUI ruled crypto haram as a currency, which matches existing state policy: under Indonesian law, the rupiah is the only legal tender, and crypto cannot be used to pay for goods.
As a commodity or digital asset, the picture was different. The council judged that crypto as traded at the time did not meet the Islamic conditions for a valid trade good, but tokens with a real underlying asset and a clear benefit could be acceptable. Industry figures, such as the head of the Indodax exchange, read the fatwa as reinforcing rules already in place rather than ending trading.
The government's commodity regulator, Bappebti, said much the same: crypto stays banned as a means of payment but can be traded as a digital commodity when it serves the public interest.
Who the Ulema Council is, and does a fatwa bind anyone?
The MUI was founded in Jakarta on 26 July 1975, during President Suharto's New Order era, as a bridge between the government and Indonesia's Muslim communities. It brings together scholars from many organisations, including the two largest, Nahdlatul Ulama and Muhammadiyah. One of its best-known jobs is issuing halal rulings on food, cosmetics, medicines and clothing.
Its fatwas carry moral weight, but they are not laws. As AFP noted, they have no legal effect on their own. They can still shape behaviour, since many observant Muslims follow the council's guidance, and they can influence how officials think about a subject. Past MUI rulings cited in coverage include a regional fatwa against the game PUBG, a ruling against online lending and a decision that Covid-19 vaccines were permissible even if they contained pork-derived ingredients.
How Indonesia actually regulates crypto
One point in early reports needs correcting. Crypto trading in Indonesia was not overseen by the Ministry of Finance at the time of the fatwa. It was supervised by Bappebti, the commodity futures agency under the Ministry of Trade, which treated crypto assets as tradeable commodities and licensed the exchanges that sold them.
That arrangement has since changed. Under the 2023 financial sector law (known as the P2SK Law), supervision of crypto assets moved from Bappebti to the Financial Services Authority, OJK, with the handover signed on 10 January 2025. Bank Indonesia took over certain currency and money-market derivatives.
The scale of the market helps explain why the fatwa drew so much attention. In June 2021 the trade minister said crypto transactions had reached about 370 trillion rupiah (around US$26 billion) in the first five months of that year. By late 2024, OJK reported more than 22 million registered crypto customers in Indonesia, with transactions of about Rp556 trillion between January and November 2024.
What about a digital rupiah?
Some 2021 coverage mentioned that Indonesia was preparing its own state-backed digital currency. At the time, AFP described the central bank only as considering one. Bank Indonesia has since studied a digital rupiah, a central bank digital currency that would be a digital form of the national legal tender rather than a privately issued token. Such a currency would not raise the same uncertainty concerns, because its value is tied to the rupiah itself.
Myths and misreadings
- "Indonesia banned crypto in 2021." No. The state never banned trading. The fatwa is religious guidance, and trading remained licensed.
- "All Islamic scholars agree crypto is haram." They do not. Scholars and bodies in different countries have reached different views, often depending on whether a token is seen as money, a commodity or a speculative instrument.
- "The fatwa covers every blockchain product." It focused on crypto used as currency and on speculative trading. Assets with a real underlying value and clear use were treated differently.
Practical takeaways for Muslim investors
For a Muslim considering crypto, the fatwa is a reminder to ask two separate questions: is it permitted by the law of my country, and is it acceptable to my faith? The first has a clear answer from regulators. The second depends on the specific asset and on the scholarly guidance a person follows. Speaking with a qualified scholar on the religious side and a licensed adviser on the financial side is wiser than relying on a headline. Crypto prices remain highly volatile, so nobody should invest money they cannot afford to lose.
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Sources: The Jakarta Post (AFP), 12 November 2021; Detik Finance, 15 November 2021; Wikipedia: Indonesian Ulema Council; OJK press release, January 2025; earlier reporting by Bloomberg and U.Today.
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