TL;DR Breakdown
- OJK bars institutions from facilitating crypto trade in the country.
- Regulator warns against crypto ponzi operators.
- Three Islamic groups have already called for the ban on crypto trading.
Indonesia Financial Services Authority, Otoritas Jasa Keuangan (OJK), has barred financial institutions from offering or facilitating crypto-asset sales.
The warning from the regulator comes barely a week after Tarjih Council and the Central Executive Tajdid, an Islamic group based in the country, proclaimed that the use of cryptocurrency both as an investment tool and as a medium of exchange is haram (forbidden).
OJK on Tuesday after the fatwa warned in a post on its Instagram against the growing number of crypto Ponzi schemes and risks of crypto investments owing to the market’s volatility. The official post also quoted the chairman Wimboh Santoso who said financial institutions are strictly prohibited from offering crypto sale services in any form.
The regulator also warned that the value of crypto assets often fluctuates and that people buying into digital assets should fully understand the risks.
Before regulators, Islamic group calls for crypto ban in Indonesia
As mentioned above, Tarjih Council and the Central Executive Tajdid issued a fatwa calling crypto trade forbidden. Tarih Muhammadiyah is the third Islamic organization to issue such fatwa against the use of cryptocurrencies in Indonesia.
Nahdlatul Ulama was the first Islamic group that deemed crypto haram due to its allegedly speculative nature. A month later, the Indonesian Ulema Council declared crypto haram as a transactional tool.
Tarih Muhammadiyah cited two reasons why crypto use is haram. Despite this, crypto trade in Indonesia continued to surge with total 2021 transactions reaching 859 trillion rupiah ($59.83 billion), up from just 60 trillion rupiah in 2020, media reported, according to the trade ministry data.
The legal status of crypto was also clear as sales of crypto assets in the commodities exchange and trading is supervised by the trade ministry and the Commodity Futures Trading Regulatory Agency.
