Islamic Financial Advisors would not Consider Sharia Incompatible CryptocurrencyNovember 19, 2018
Halal means permitted and haram means non-permitted. The Muslim faith has got strong classifications about money.
There has been continual debate over whether cryptocurrency is halal or harem. Islam legal principles do not permit interest payments. The economic activity in Islamic laws is based purely on physical assets. And they frown when it is about speculation. So, how do they classify cryptocurrencies?
Islamic Financial Advisors are worried about the speculative behavior of cryptocurrency. Islamic cryptocurrency companies are debating about whether it is religiously permitted to launch the instruments that are backed by physical assets. This was a widespread issue when the one gram cryptocurrency backed by gold was launched. The idea of supporting the cryptocurrency gold was to work in compliance with gold rates, thus working out of speculation per Islamic principles.
Islamic societies accept gold as a form of money. Therefore, a cryptocurrency that is backed by gold is valid per the religious principle of Islam.
Muslim bankers and financial advisors would not consider working on financial instruments that are not in compliance with Islamic law. Financial Instruments should be Sharia Compatible for them to accept products and systems like cryptocurrency.
As reported in cryptocurrency developments concerning the religious faith it was previously reported that there was a mosque that accepted cryptocurrency to give alms. Some of the Muslim scholars are of the opinion that cryptocurrency is halal.
Several Fintech firms are pursuing Sharia-compliance in their cryptocurrencies to gain access to the Muslim economy. Several Muslim exchanges will accept cryptocurrency, provided the religious scholars approve the currency as being compliant with the religious principles.
Back in October, the AAOIFI joined in a conference to determine the rules that should be applied for Islamic Finance. They felt that they would be able to attract Issuers of Islamic Bond in Sharia-compliant contracts. Thereby creating a financial product that is in compliance with religious norms and thus making it easy to bring it to the market.
This regulation is very important as Islamic Finance is of importance in several countries like Qatar, Malaysia, Kenya, Morocco, etc. The applicable standards for financial inclusion are yet to be updated. Over 100 such measures are already made mandatory.
The (AAOIFI) conference of Sharia scholars met in Bahrain early this year to classify cryptocurrencies. It was scheduled as one of the major items on the agenda.
A surefire decision about cryptocurrency has not yet been issued. Confirmations will come with time. Standards are however to be implemented.