This month, the government of Oman, located on the southeastern border of the Arabian Peninsula, significantly expanded its involvement in the world of digital currencies. This action is part of Oman’s larger ambition to become a leading digital force in the increasingly competitive West Asian region.
The West Asian country is pursuing a strategy to establish itself as a digital hub in an increasingly competitive region. On August 23rd, Green Data City, Oman’s first accredited crypto-mining corporation, and the Phoenix Group, based in Abu Dhabi, announced a $300 million alliance. They plan to start a 150-megawatt crypto-mining business next year.
Oman pours millions into crypto amid Sharia law uncertainties
In August, the Omani government announced new investments of close to $800 million in crypto-mining operations. According to a local news report, Muscat approved a $370 million farm operated by Exahertz International with plans to launch 15,000 more devices by October.
The farm will add 15,000 additional machines by October. Oman’s Minister of Transport, Communications, and Information Technology, Said Hamoud al-Maawali, stated in an announcement that the investments represent a “major milestone” in the country’s efforts to “help accelerate the growth” of its digital economy.
It is noteworthy that the heightened attention towards cryptocurrencies in Oman coincides with a current discourse among the Islamic community over the compatibility of digital currencies with Islamic principles, also known as sharia.
Sharia law encompasses a set of principles that govern the ethical permissibility, known as halal and impermissibility, referred to as haram, of financial transactions.
Certain Islamic scholars contend that the speculative nature frequently associated with cryptocurrencies renders them impermissible (haram). This perspective has resulted in the issuing of fatwas, which are authoritative Islamic legal rulings, by prominent Islamic communities in nations such as Turkey, Indonesia, and Egypt.
However, it is important to note that Islamic legal thinking encompasses an alternative position. There are proponents who assert that the possession of digital currencies such as Bitcoin does not include the accrual of interest, commonly referred to as riba, hence potentially aligning with the principles of halal.
The increasing worldwide recognition of cryptocurrencies is also argued to strengthen the argument for their compliance with Islamic principles. While the discourse among Islamic scholars remains ongoing, it is noteworthy that Muslim nations have emerged as prominent crypto adopters during the past few years.
Islamic nations lead in crypto adoption
Despite the fact that Islamic scholars remain divided, Muslim-majority nations are rapidly adopting digital currencies. According to a report by Chainalysis from October 2022, the Middle East and North Africa (MENA), predominantly Muslim-majority regions, were the fastest-growing crypto markets in 2022.
Four Muslim-majority countries ranked among the top 20 adopters on the Chainalysis Crypto Adoption Index, along with India and Nigeria, both of which have significant Muslim populations.
Moreover, it is important to note that the regulatory attitude of the Muslim world towards cryptocurrencies is a mixed package. For instance, the United Arab Emirates is at the forefront of crypto-friendly regulation. In contrast, Turkey allows crypto trading but prohibits their use for remittances and by financial intermediaries.
In the end, Oman’s enormous investment in the crypto industry indicates its aspiration to be a digital economy leader despite ongoing debates regarding the sharia compliance of such investments.
