Indonesia Against Crypto: Islamic Organization Declares “Haram”
Crypto activities were declared forbidden by the religious law of the largest Islamic organization of Indonesia, Nahdlatul Ulama. A heated debate was carried before arriving at the conclusion of declaring digital currencies as “haram”. On previous occasions, the idea of a ban was not well received by many Muslims.
The discussion of whether cryptocurrencies were to be considered haram in Islam is not new, but a formal decision by a large organization such as Nahdlatul Ulama had not been taken in Indonesia until now and takes many by surprise since their crypto trading market was booming.
Muslim scholars have considered for a while now that cryptocurrencies do not represent “an honest work”, having compared them with gambling and other activities considered to be against the Islamic religious law.
On the other hand, some Islamic jurists have opposed this idea, thinking that cryptocurrencies should be viewed as “halal” or permitted.
Under Islamic law, many mediums -such as currencies, grapes, etc.- are considered “halal” or lawful, but some activities related to those mediums -such as using currencies as a commodity to make a profit, using grapes to make wine, etc.- are “haram” or forbidden.
These conceptions can open a wide spectrum of considerations to evaluate when looking into the permissibility of Sharia law. Thus, a long and heated debate around the use of cryptocurrencies.
Nowadays, the digital space has become more important for currencies while cash has a narrower field of possibilities. As technological innovation has conquered many, regardless of religion, Islam sees ill activities that can generate huge amounts of money through interest since they think of it as “unearned income”.
Furthermore, the meeting carried by the Islamic organization considered digital currencies secured by cryptography as a medium linked to many illicit activities. The public announcement on the East Java Nahdlatul Ulama branch website reads:
Participants of the bahtsul masail formed a view, despite crypto already being acknowledged by the government as a commodity, that it cannot be legalized under the [Islamic sharia].
Why Muslims Might Now Be Happy With The Resolution
Indonesia holds the largest population of Muslims in the world, and cryptocurrencies had become of great interest to them, especially since the pandemic.
The nonbinding legal opinion comes in a separate way from Jakarta’s government’s recent announcement about their lack of interest in following China’s steps regarding their ban on crypto transactions.
Related Reading | Indonesia Legitimizes Cryptocurrencies, Classifying Them as Commodities
The country’s Minister of Trade stated in September to BeritaSaru.com they would find new regulations to stay away from illicit activities but showed no interest in prohibiting it.
Last August The Jakarta Post reported the rapid growth of the Indonesian crypto space. The Trade Ministry stated that investments in cryptocurrencies had grown to “more than Rp 370 trillion (US$25.8 billion)” over five months. By May, Indonesia had over 6.5 million crypto investors leading over 5.37 million retail investors.
Related Reading | 1 in 9 Indonesians Now Own Cryptocurrency, Report
In the same report the country manager of one of Indonesia’s crypto exchanges, Luno Indonesia, had been confident about the future of cryptocurrency in the country projecting growth of investors that would double or triple the numbers at the time.
This is not the first religious ban on cryptocurrencies. A similar prohibition happened earlier in the year in Ingushetia, where the public had a lot to say about the Islamic Cleric’s reasons over the decision.
Comments of both sides were reported in the local newspaper Ingushetia. While Deputy Chief Mufti Magomed Hashtyrov stated that “Only honest labor brings people together, and virtual easy money quarrels them.”, online users responded with equally strong points of view:
I wouldn’t say that’s exactly ‘easy’ money. Knowledge and ability are needed to use it. It seems to me that this issue has not been fully studied by theologians,
Others thought that these resolutions come from “a very old version of the fatwa” and some scholars still position themselves on the side of the crypto users.
There is yet to see the effect of this issued fatwa on Indonesia’s market, crypto investors, and previously enthusiastic exchanges. They might hope for the government to bring clarity to all. The question raises whether opposite views from scholars could weigh-in for future discussions.
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ETP Issuer Valour Set To Provide Exposure To Uniswap (UNI)
Uniswap is one of the top decentralized exchanges in the crypto industry right now. The price shows a 2.50% increase in 24-hour operations, and it stands at number 13 in the CoinMarketCap ranking.
This shows that the token is moving towards price growth. Uniswap community is also hopeful that as the exchange gains more exposure, there’ll be more positive trade volume and price increase.
Uniswap To Gain More Exposure Through Valour
In a recent development, an issuer of ETPs based in Zurich is set to launch an investment product that will bring the long-awaited exposure to UNI. So, there is more enthusiasm in the community as this action might help increase UNI’s value.
UNI maintains an upward trend | Source: UNIUSD on TradingView
The new product relies on UNI as its underlying asset. Uniswap ETP is a passive investment instrument available on Boerse Frankfurt Zertifikate AG, a stock exchange in Europe.
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Many people in the community have wondered at the reason behind the creation of the Uniswap ETP. But Diana Biggs, the Valour CEO, revealed that stock exchanges and traditional markets don’t have access to investment products based on the blockchain. Therefore, this product now is a way to ensure that investors can also participate in Defi seamlessly.
A Brief on Valour Assets
Valour is one of the ETP issuers that supposedly connects investors to innovative products for investments. The team is claimed to have top-notch experience in digital assets and financial markets stemming from their many years in the sector. The firm has been operating since 2019 and has been growing tremendously since then.
For instance, in 2015, the founders listed a crypto Exchange-traded product on Nasdaq, which none other has done. In 2017, they also became the first to list a crypto mining firm on the Toronto Stock.
The company has been recording massive growth since its launch. On October 25, it reported that its AUM (assets under management) rose more than 3,000% this year, a $290 million increase from recorded trading on traditional SEs.
Uniswap, on the other hand, has been recording growth as well. It also rose above $500 billion in trading volume from 2018.
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Many players opine that the volume increase in Uniswap Layer 2 solution is due to high fees for transactions on Ethereum. But that’s not all; even the Uniswap v3 is also recording huge volumes to the tune of $115 million daily across diverse networks.
Featured image from Unsplash.com, charts from TradingView.com
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