Open source protocol Stellar has announced that it is now Sharia Law compliant in the cryptocurrency space, according to Cointelegraph.
Stellar has claimed to be the first DLT protocol to receive such certification, and the company has been the focus of a Shariyah Review Bureau examination. The bureau is an advisory body licensed by the Bank of Bahrain which offers guidance to company activities regarding Sharia law.
The subject of Sharia Law and how financial institutions observe it, particularly among Muslim communities, has been the focus of attention lately, since at statement made by Mufti Muhammad Abu Bakar, a Sharia advisor and compliance officer at Blossom Finance in Jakarta, Indonesia.
His published paper indicated that the purchasing of Bitcoin by Muslims could be permitted (halal) in certain situations given that cryptocurrencies fell into the ribawi category, as do gold and silver. According to Islamic law, items falling under the ribawi category must be exchanged in equal measure and with immediate transfer of possession, otherwise, transactions may involve riba or usury, a major prohibition in Islam.
The topic again came into focus when a London mosque raised cryptocurrency donations for essential repairs having first established that such donations were not in violation of Sharia law which was a concern to some at the time. The mosque followed the described procedure exactly for dispersal and payment of received fund according to Islamic law and agreed it had been a success.
With its Sharia certification, Stellar is now in the position of being able to focus on conducting business in areas with large Muslim populations such as the Gulf and parts of Southeast Asia, where blockchain technology is under development.
Although Stellar calls itself the first Sharia approved DLT protocol, it should be noted that Mufti Bakar’s announcement earlier this year gained approval around the Islamic world for Bitcoin as being permissible (halal), indicating that such a description might apply to all cryptocurrencies providing that they were immediately transferred and not held speculatively to be sold for profit.
In March NOORCOIN, said to serve the needs of 1.8 billion Muslims, received a Sharia Certificate, becoming, according to its own description, “the first Sharia-compliant utility token”.
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