Blockchain and Shariah compliance is the new combo that is getting blockchain tracking in the Muslim world, and the United Arab Emirates is at the center of it.
Due to the efforts of crypto enthusiasts across the globe, a Sharia Compliance Certificate was issued to a blockchain company named X8 AG. This marked that the Middle East has formally joined in the crypto sphere.
Al Hilal Bank a bank based in Abu Dhabi recently revealed that the bank has successfully completed the transaction of ‘Sharia compliant’ bonds using the blockchain. These bonds allow investors to earn profits without breaching Sharia or Islamic Law.
Sources claimed that by using distributive ledger technology (DLT), the bank is “to sell and settle in the secondary market.” Furthermore, sources stated that the bank is making efforts to revolutionize the banking systems of the Middle East using the blockchain technology while remaining inside these boundaries drawn by the Islamic law. Sources have claimed that this deal was worth around 1 million dollars and the client was a private Investor.
Stellar is the seventh largest Cryptocurrency network and has recently acquired permission from the Sharia Review board. The company has become the first DLT protocol to obtain Sharia Clearance. The board has provided Stellar guidelines that the firm must follow to work with Islamic financial institutions. The board has also published a sixteen-page document that describes the benefits and applications that these cryptocurrencies.
Moreover, critics have stated the price volatility of these cryptos make them similar to usury which is haram under Shariah. Regardless, another group of experts argued that these tokens are accepted as currency in certain areas of the world while being accepted as a payment method in various other states.