What will save crypto?

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May 22, 2019 by Blockchain Consultants (https://blockchainconsultants.io/author/news/)

Sulaiman al-Fahim Contributor

Sulaiman al-Fahim is an international businessman based in Dubai with focuses on property

management/real estate, cryptocurrency, and philanthropy. His company, Sulaiman Al-Fahim
Holdings, is a global operator that facilitates transactions to develop properties in various areas of
the world. He is also an advisor and partner at ADAB Solutions, a group dedicated to bringing the
newest movement in nancial tech to the Muslim world.

Cryptocurrency technology has been on a tumultuous journey since its creation in 2009.
According to a recent New York Times article
(https://www.nytimes.com/2019/04/02/technology/cryptocurrency-bust-wall-street.html), bitcoin
enthusiasts in the U.S. wrongly predicted the involvement of Wall Street institutions and investors
in cryptocurrency, which would have given it legitimacy. Instead, the opposite effect has taken
place: big investors have avoided crypto because of its volatility, as shown by bitcoin’s
devastating drop in price (https://cointelegraph.com/explained/the-biggest-rises-and-falls-of-
bitcoin-explained) last year.

Elsewhere in the world, particularly in the Middle East and among major Muslim communities,
there is a growing curiosity surrounding cryptocurrency — and a call for regulation that deals with
the stigmas against it. There are about 1.8 billion Muslims worldwide, and the global Islamic
economy with the inclusion of crypto tools, services and products could equate to approximately
US$3 trillion by 2021 (https://www.longhash.com/news/cryptocurrencys-race-for-shariah-
compliance). If we are able to work through the challenges and implement crypto for a Muslim
audience, the addressable market for crypto could increase exponentially.

But since its inception, Muslim leaders and communities have debated on whether or not
cryptocurrencies should be deemed halal or haram
(https://www.aljazeera.com/news/2018/04/islam-cryptocurrency-halal-halal-
180408145004684.html), permissible or forbidden. Shariah-compliant nance is a fundamental
part of Islamic tradition, and it’s the primary reason why Islamic countries have been so dubious of
the new currency.

The challenge of Shariah compliance

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Shariah compliance refers to nances and investments that adhere to Islamic law. This includes
prohibiting riba (https://www.investopedia.com/terms/r/riba.asp), or charged interest, and avoiding
any “unethical concerns,” such as maisir (https://en.wikipedia.org/wiki/Maisir) (gambling), alcohol
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and tobacco production, weaponry and more. It also prohibits qimar
(https://www.islamic nancenews.com/glossary/qimar), or investments based on speculation.
Crypto’s proven volatility has been likened to gambling and speculation, a critical reason behind
the debate of halal and haram. Countries like Qatar, Saudi Arabia and Jordan
(https://cointelegraph.com/news/from-qatar-to-palestine-how-cryptocurrencies-are-regulated-in-
the-middle-east) have outright banned cryptos, and the concern over the legitimacy of crypto has
thus far prevented the Middle East from truly embracing the technology.

But for those paying attention, the attitude around cryptocurrency in the Middle East has begun to
shift in the past year. The United Arab Emirates (UAE) has led the charge in nurturing an
acceptance of cryptocurrency in the region, and launched a strategy that aims for 50% of all
government transactions to occur through blockchain
(https://www.newsbtc.com/2018/11/06/the- rst-of cial-cryptocurrency-exchange-to-be-
registered-in-uae/). The rst cryptocurrency exchange in UAE, the Cryptobulls Exchange
(https://www.cryptobulls.exchange/why-us), opened last year and gained more than 200,000
traders. Ripple (https://ripple.com/), a top global blockchain platform, has plans to set up an of ce
in Dubai, and is working with UAE Exchange, the country’s largest remittance rm, to set up
blockchain-based payments to Asia.

How companies and institutions are

approaching compliance
In addition, the development of Shariah-compliant crypto and blockchain services is beginning to
weave a new narrative, an essential one that reconciles and compromises with the tenets of
Islamic tradition. In mid-2018, cryptocurrency and nance platform Stellar
(https://www.stellar.org/) was permitted to integrate and service nancial institutions in the
Middle East by The Shariyah Review Bureau (https://shariyah.com/) (SRB), a leading international
advisory agency licensed by the Central Bank of Bahrain, as a result of its compliance to Shariah
law in its practices. X8 AG (https://www.x8currency.com/), a Swiss-based startup well known for
its at-backed crypto, also received certi cation from the SRB, demonstrating that at-supported
currencies are more appealing to Islamic countries.

Even more recently, 2019 has already seen the launch of meem
(https://www.gfmag.com/magazine/april-2019/worlds-best-investment-banks-2019- nancial-
technology), Bahrain’s rst fully digital bank, and the rst Shariah-compliant digital bank in the

region. It will also see the launch of Qintar, the rst crypto token expressly made to be Shariah-
compliant (https://www.livebitcoinnews.com/qintar-the- rst-sharia-compliant-token-is-launched-
in april 2019/) It will be built on their Islamic Blockchain (ISL) which has received fatwa (a non /
in-april-2019/). It will be built on their Islamic Blockchain (ISL), which has received fatwa (a non-
binding legal opinion) of approval from Islamic scholars and researchers. The ISL is secured and
speedy with full transparency, allowing users to safely control their own trades and ensure that
their transactions follow restrictions like riba or maisir.
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Shariah compliance has hit the ground running

These swift, sweeping movements toward Shariah compliance in the past few years are paving
the way for a wider adoption of the technology, as well as an increased mindfulness and inclusion
of the way business is conducted in different cultures. The establishment of new institutions that
all play a part in a Shariah-compliant crypto ecosystem, such as banks and exchanges, help build
up a regulated foundation that can keep cryptocurrency stable and provide a vetting process for
which projects will be deemed halal or haram.

And of course, the development and counsel of Shariah advisory boards in various forms not only
lend legitimacy, but keep companies accountable in enforcing these rules. Approval from Islamic
scholars and experts will also work to lift the stigmas of cryptocurrency in the region and the
culture.

It is evident that cryptocurrency and blockchain are beginning to earn the favor of Islamic
countries. It is also clear that the necessary steps are already being made in order to make
blockchain and crypto Shariah-compliant, as well as increasing acceptance of the new ntech
among Muslim people.

The nearly two billion Muslims in the world represent a signi cant 23% of the total population
(https://www.blockchaintechnologies.com/islamic-scholars-have-determined-cryptocurrency-is-
halal/), and by including them in crypto ventures through Shariah-compliant regulation, we can
see crypto nally become the global economic system that it deserves to be.

Read more: https://techcrunch.com/2019/05/21/what-will-save-crypto/

(https://techcrunch.com/2019/05/21/what-will-save-crypto/)

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