Can cryptocurrencies be Sharia-compliant?

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Recent studies published by Sharia scholars and advisors have come to the conclusion that Bitcoin, among other cryptocurrencies, can be considered as a sharia-compliant investment instruments. This news is leading to a higher popularity and adoption of cryptocurrencies among the Muslim community.

There has been a continuous debate on whether cryptocurrencies can be considered to be compliant with the sharia law or not. Hitherto the Muslim population in general has been acting cautious whether cryptocurrencies are a halal form of investing. One reason behind this is that cryptocurrencies can be considered as a speculative investment, and in sharia law, speculations and earning interest is forbidden. In the Gulf region, regulators are following the developments of cryptocurrencies with high levels
of interest.

When it comes to startups, there is a new trend for cryptocurrency companies. For instance, one new interesting startup is a Dubai-based digital asset wallet and exchange platform allowing you to buy digital assets in Emirati Dirhams. They are targeting multiple Muslim countries such as Kuwait, Saudi Arabia, Qatar, Bahrain, and Oman. Another example is a start-up offering a gold- backed cryptocurrency based on Blockchain technology. They are providing an investment opportunity in a physically backed cryptocurrency, which makes this investment Sharia-compliant.

At this moment there is still little certainty among Muslim governments and institutions on cryptocurrency regulation and its Sharia status. Only time will tell.

Cryptocurrencies entering the marketplace brings questions also to the established asset and fund managers. Are they able to handle this new kind of asset type from the operational point of view, such as tracking and reporting new currencies?

In the FA Platform companies are able to track all kinds of new asset types, including cryptocurrencies such as Bitcoin. Additionally, FA Solutions has the capabilities and experience to deliver a solution compliant with the Sharia law to a client. FA’s intelligent rules engine helps you maintain your positions in accordance with your strategy: For example, you can configure and restrict assets that are not suitable as sharia-compliant investments.



If you wish to learn more on how FA Solutions can help you to manage assets in a Sharia-compliant way, just leave your email address below and we will be in touch.

 


 
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