Cryptocurrency and blockchain projects focused on Muslim users and using the principles of Islam and Shariah in the formation of their ecosystems began to appear relatively recently. If 10 years ago few of them dared to address the Islamic finance in the blockchain, then over the last 5-7 years the situation has changed markedly. What’s it? Just a fashion statement or a new round of development on the digital asset market?
When digital currencies became mainstream, many Muslims began to think about buying cryptocurrencies. But unlike other investors, they faced not only high volatility and price fluctuations, but also certain religious considerations.
The Islamic financial industry has always relied on the decisions of scientists and religious experts, and therefore for a long time remained a closed system in which changes were practically unthinkable.
“Cryptocurrency is still a subject of debate from the Shariah point of view and there is still no central authority in Islam that could unequivocally declare whether cryptocurrency is halal or haram,” says Mazin Khalil, deputy director of financial services and Islamic finance at Grant Thorton in Abu Dhabi.
“Excessive uncertainty” in the value of cryptocurrencies can also be interpreted as a form of gambling, but even so, it is gaining increasing popularity among Muslim investors. This became especially noticeable after the research conducted by various analytical companies. And they clearly indicate that countries with a predominant Islamic population are becoming more and more active players in this market. In 2021, Pakistan entered the top-10 countries with the largest distribution of crypto and blockchain projects, as well as directly digital currencies for the first time. Pakistan even managed to move India which always was in all possible cryptocurrency tops. But the Muslim population of India exceeds the number of all residents of Pakistan.
“At the moment, the Muslim population, especially in countries with unstable economies is the force that actively supports the cryptocurrency market. And this is not to mention the active spread of digital assets in the traditionally prosperous countries of the Persian Gulf. Halal projects in the field of cryptocurrencies definitely have huge potential and much greater prospects among Muslim investors,” says Ibrahim Khan, one of the founders of IslamicFinanceGuru.
An increasing number of startups are starting to look towards Islamic finance. And they are trying to go beyond just selling their tokens. Decentralized finance with developed ecosystems based on the principles of Islam and Shariah is exactly what new Islamic investors need.
“Muslims approach investment issues more consciously and thoughtfully. I think in the next few years we will see a large number of young cryptocurrency users who need to express their attitude to the digital economy through their ethics and their religion,” Ibrahim Khan continues his story about the market.
“We understand that cryptocurrencies are an ideal product designed for emerging markets, many of which are located in the Islamic world,” says Daniel Ahmed, adviser to the Office of the Prime Minister of the UAE.
Ahmed believes that cryptocurrencies and decentralized finance offer unique solutions in countries where political and financial risks are high. So, last year, the number of cryptocurrency owners in Turkey sharply increased after a sharp drop in the national currency exchange rate. According to some reports this growth exceeded 600% from April 2020 to 2021, and the number of crypto transactions increased fourfold.
Changing the attitude of individuals in the Islamic markets to cryptocurrencies is still th key task for the development of the market.
“We see an incredible opportunities both for startups serving the Muslim population in affluent regions of the world with halal products, and for the introduction of this technology in developing countries,” says Salman Masaud, from the Australian Gulf Capital fund.
IslamicCoin can become an ideal tool for the development of new financial systems based on the rules of Islam and Sharia. The mission of the project is to provide the international community of followers of Islam with a reliable and promising financial instrument that allows for independent financial cooperation to support innovation and philanthropy.