Indonesian regulator takes cue from Islamic NGOs, bars crypto sales for institutions

Indonesia’s financial watchdog the Otoritas Jasa Keuangan (OJK) warned financial institutions in the country against offering or facilitating crypto-asset sales.

On Tuesday, the official Instagram account for OJK posted a warning 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 official post read:

“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading.”

The current warning against crypto investments and prohibition of crypto trading services for financial institutions comes on the heels of several calls for a ban on crypto use from the country’s leading Islamic non-government organizations (NGOs). As Cointelegraph reported earlier, a total of three Islamic organizations have issued a fatwa against crypto use by Muslims, deeming it haram.

In October 2021, major Islamic organization the Nahdlatul Ulama deemed crypto haram due to its allegedly speculative nature. A month later, the Indonesian Ulema Council, declared crypto haram as a transactional tool. However, it noted that cryptoassets can be used as an investment tool if they abide by Sharia tenets. Muhammadiyah became the third Indonesian Islamic organization to issue a fatwa against cryptocurrency use as a payment and investment tool.

Indonesia over the years has grown to become one of the leading crypto economies in Asia. The total crypto transaction reached 859 trillion rupiahs ($59.83 billion) in 2021, up from 60 trillion rupiahs ($4.18 billion) in 2020. 

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Crypto assets are regulated as tradable commodities in Indonesia, governed by the trade ministry and the Commodity Futures Trading Regulatory Agency. The ministry is currently working on setting up an independent market for digital assets called the Digital Futures Exchange, expected to be launched in the first quarter. However, crypto as a form of payment tool is illegal in the country.