An illustration of Bitcoin. (B1 Photo)

Indonesia's Largest Crypto Exchange Respond to Ulema's Bitcoin Fatwa

BY :JAKARTA GLOBE

NOVEMBER 12, 2021

Jakarta. Indodax, Indonesia's largest crypto asset exchange by the number of users, has reacted to the latest fatwa from one of Indonesia's largest Islamic scholars bodies that declared crypto assets, like bitcoin, ethereum, or Cardano, used as a medium of transactions as haram or forbidden by Islamic law.

According to Indonesia Ulema Council (MUI), cryptocurrencies are still halal as long as they are used as assets or investments under certain circumstances, not as a means of payment. Fatwa is a nonbinding ruling from a recognized authority on an issue in Islamic law.

MUI said only crypto assets with similar properties as sil'ah, or goods, are allowed to be traded. 

In response, Indodax CEO Oscar Darmawan emphasized that crypto assets are not used as currency within Indonesia anyway.

"In Indonesia, crypto assets are indeed not for currency as Bank Indonesia regulations align with MUI deliberations which forbid crypto as a currency. In Indonesia, the Rupiah is the only recognized currency," he said. 

"At Indodax, we trade many types of crypto assets. The largest trading volume at Indodax comes from crypto assets that have physical assets as underlying assets," Oscar said.

Crypto's Underlying Assets

Oscar Darmawan also explained that almost all crypto assets have their own underlying assets. 

"All crypto assets have an underlying. There are only those whose underlying is easy to understand in physical assets such as USDT, LGold, LSILVER, XSGD, but there are also those with underlying in the form of issuance fees such as bitcoin."

Darmawan continued by explaining the digital costs of Bitcoin assets, including bitcoin mining fees for the verification process and bitcoin issuance, which requires electricity costs of 150 TeraWatt per hour.

"This is technological innovation. Now, money doesn't have a physical form, just digital like e-money. So because there is a production cost, bitcoin doesn't just appear, so don't be surprised if the price of bitcoin keeps going up," Oscar said.
 

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