Jakarta. The Financial Services Authority (OJK) is exploring the development of Sharia-compliant cryptocurrency assets to support the growth of Indonesia's emerging investment sector.

Hasan Fawzi, OJK's executive head overseeing crypto assets supervision, said the agency is open to advancing Sharia-based cryptocurrencies. He noted that the Sharia Crypto Asset Association has proposed a collaboration to introduce digital assets aligned with Islamic principles.

"Globally and regionally, this is a common practice. It is not unusual to create crypto assets that adhere to Sharia principles," Hasan said recently in Jakarta, as reported by Investor Daily.

However, implementing Sharia principles in cryptocurrency is not without challenges. The Indonesian Ulema Council (MUI) has specified that cryptocurrency can be considered halal if it meets conditions such as being a valid commodity (sil'ah), having an underlying asset, and offering clear benefits. Conversely, assets containing elements of gharar (uncertainty), dharar (harm), or qimar (gambling) are deemed haram.

One promising innovation, according to Hasan, is the tokenization of physical assets like gold. A blockchain-based token backed by a physical asset is currently being tested in OJK's regulatory sandbox. If successful, it could open the door for other Sharia-compliant crypto products.

As part of its strategy, OJK plans to collaborate with the National Sharia Council (DSN) of MUI to ensure all Sharia-based products and services comply with Islamic rules. Market players with preferences for Sharia-compliant services will also be involved.

"In Indonesia, the declaration of Sharia principles lies with DSN MUI, so this will be done in collaboration," Hasan added.

While no timeline has been set for launching these products, the regulatory sandbox provides a framework for testing new business models, mechanisms, and innovations.

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