A Swiss-based fintech firm has successfully been certified by Islamic scholars, enabling it to trade digital currency in the Middle East.
Sharia law prohibits Muslims from lending money to anybody with the expectation of receiving interest on this amount. It regards fractional reserve lending that the majority of fiat currencies operate with as usury. Cryptocurrencies differ in this respect as they are underpinned by logistics of scarcity, appreciated by those practicing Sharia as it acts similarly to commodity trading such as gold that they adhere to.
With the news earlier this year that cryptocurrencies wouldn’t, in most circumstances, conflict with Sharia Law, the number of fintech companies moving into Sharia-compliant finance has notably increased. The Middle East, with its large Muslim population, has also become a potential hotspot for blockchain development.
The Swiss company X8 AG claims that its Ethereum-based cryptocurrency will address concerns of some Islamic scholars who are often concerned about the religious validity of cryptocurrency’s price volatility and the types of assets behind them. X8 Director Francesca Greco maintains that the fact that their cryptocurrency is backed by a basket of eight fiat currencies and gold should be a convincing enough guarantee. Greco maintains, “The Gulf region is a really good place for financial technology companies because they all want to become hubs for fintech.”
The Zug-based company which has now gained its certification from the Shariyah Review Bureau (SRB), an Islamic advisory firm licensed by Bahrain’s central bank, hopes to launch a crypto-exchange that would include a Sharia-compliant component. It has recently had meetings with other exchanges in the region.
This follows an announcement last week that another Islamic financial center, Dubai, was about to get its first cryptocurrency exchange after local media Al Zarooni Group and the Crypto Bulls announced the launch of the Crypto Bulls Exchange. Chairman of the Al Zarooni Foundation, Suhail Al Zaroon, stated:
“This will be the milestone for getting global investments opportunity from all over the globe in UAE, as all financial techs and investors are looking forward in crypto and blockchain industry.”
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