In their blog article, Islamic finance and Sharia consulting company Amanie Advisors revealed that they have partnered with the Ethereum Foundation to ensure the platform’s adherence to Islamic religious rules (Sharia).
Stellar was the first Distributed Ledger Protocol (DLT) to be reviewed by the Shariyah Review Bureau (SRB) last year to obtain Shariah adherence accreditation in the money transfer and asset tokenization domain.
The firm released a report, after entering into partnership, to clarify Ethereum’s adherence with the Islamic law governing the financial market. The study began by illustrating the significance of cash in Islam.
It indicated that Islam does not regard cash as a commodity, but rather as an swap mechanism. Money really has no intrinsic value. “There is no room for profit by the exchange of money in the same denomination. The profit earned by the exchange of money (of the same currency or denomination) or the papers representing them is interest, and is therefore highly prohibited in Islam,” suggesting that if Ethereum were used to make profit from interest, it would not be Shariah-compliant.
Sharia law follows a rigorous norm for financial operations and fines, particularly in specific instances of usury (promotion at unreasonably elevated concern). Amanie Advisors therefore posed inquiries as to whether Muslims should mine or trade Ether, employ decentralized applications (DApps) or smart contracts on the blockchain platform.
Before any decision was made by Amanie Advisors, they extensively studied Ethereum.
The advisors stated: “It is hoped that with the findings, parameters, and guideline outlined in this paper, it would serve as a catalyst to the Islamic finance market, and wider Muslim population to enter and participate in the space as well.”
In August, Amanie Advisors’ CEO Suhaida Mahpot stated that she saw hesitation among the Islamic community to recognize crypto.
Suhaida Mahpot elaborated the manner in which crypto adoption can be accomplished:
“We need to educate institutions more about how digital currencies can be accepted, and how the transparency from using cryptocurrency would benefit the wider society. Perhaps, this mindset will change over time.”
According to the scholar-approved white paper, the platform and currency comply with Shariah. The document also included Shariah approval of the venture and the coin. Sharia-compliant also implies that Islamic financial institutions in the Gulf Cooperation Council (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) and areas of Southeast Asia (i.e. Indonesia and Malaysia) will now be allowed to mine and trade ETH.
