Unfortunately, there is currently no single body or Sharia council that deals with the certification of cryptocurrencies on a global level. Each Islamic financial institution and Sharia council is guided by its own criteria and procedures for evaluating its performance.
Reasons for the lack of a single standard
- The youth of the cryptocurrency industry: Blockchain technology and cryptocurrencies are constantly evolving, which makes it difficult to form stable and long-term security standards.
- Differences in interpretation of Sharia law: Even among scholars of theology, there are different points of view on some aspects of Islamic finance.
- Lack of a clear regulatory environment: Many countries have not yet developed a full-fledged regulatory system for cryptocurrencies, which creates additional difficulties for the certification of cryptocurrencies.
Despite the lack of a single standard, a number of sharia councils attached to major Islamic banks and financial institutions have begun actively exploring the possibilities of certifying cryptocurrencies and related products. Among them, we can distinguish:
- Tips for Islamic banks: Many major Islamic banks such as Al Rajhi Bank (Saudi Arabia) and Dubai Islamic Bank (UAE), have their own sharia councils that develop criteria for evaluating the Islamic compatibility of various financial instruments, including cryptocurrencies.
- International organizations: The International Council for Islamic Financial Services (IFSB) and other international organizations develop standards and guidelines for Islamic financial institutions, including aspects related to digital assets.
Criteria for certification of cryptocurrencies
When evaluating the compliance of cryptocurrencies with Sharia law, Sharia councils usually take into account the following criteria:
- Transparency: All transactions must be transparent and easily traceable.
- Absence of riba (usury): The profit-making mechanism should not include interest accrual.
- Ban on speculation: Cryptocurrency should not be used for speculative operations.
- Social responsibility: The project behind cryptocurrency should be aimed at solving real problems and benefit society.
- No connection to prohibited activities: Cryptocurrency should not be used to finance illegal transactions.
Despite the existing difficulties, the prospects for the development of halal cryptocurrencies are very optimistic. With the growing popularity of digital assets and the development of blockchain technologies, more and more Islamic financial institutions and Sharia councils are showing interest in this area.
What you need to develop the halal cryptocurrency market:
- Development of common standards: It is necessary to create uniform international standards for certification of cryptocurrencies.
- Regulatory support: States should develop clear and transparent rules for regulating cryptocurrencies.
- Creating specialized platforms: Special platforms should be created for trading halal cryptocurrencies.
- Raising awareness: It is important to conduct educational events to inform Muslim investors about the opportunities and risks associated with cryptocurrencies.
Certification of cryptocurrencies in accordance with Sharia principles is a complex and multifaceted process." However, given the growing interest in digital assets among Muslims, we can expect that this area will be actively developed in the coming years."