What is a Shariah-compliant crypto and why does it matter?

A growing number of cryptos have claimed to be Shariah-compliant. Just for you to know, Shariah is a set of rulings in Islam in accordance with the guidelines of the Quran and teachings of the Prophet Muhammad, peace be upon him.

So what does a Shariah-compliant crypto mean to Muslims? And why does it matter to non-Muslims?

For a Muslim investor, looking for halal investments is obligatory upon him. Muslims are prohibited to get involved in gharar (uncertain) activities, what more things that are clearly haram (forbidden). Hence, a Shariah-compliant crypto is definitely a huge advantage for Muslims who are looking to participate in the ever-volatile cryptocurrency world.

For a token to be certified as Shariah-compliant, it needs to meet a set of strict conditions and only highly qualified Shariah scholars are able to certify it. For example, an asset must contain real value to make it Shariah-compliant. This concept is very important to ensure justice is upheld in every commercial transaction. It’s an open secret that most of cryptocurrencies’ values out there are based on speculation only and not backed by real assets.

Another instance is there must be no element of excessive uncertainty in every aspect of an asset to make it Shariah compliant. Cryptocurrency is created upon the blockchain technology, which is decentralised and very transparent in nature, thus, eliminates the uncertainties which are always associated with conventional investment.

How about non-Muslims? How is a ‘halal’ crypto can be advantageous to them?

It turns out, the very principle of Shariah law (maqasid al-shariah) is to protect the basic rights of human being; religion, life, intellectual, heredity and wealth. Any human being — Muslims or not — will benefit from Shariah law as the rulings seek to uphold fairness and righteousness in every element of life. In fact, it’s not news to find a lot of non-Muslims prefer Islamic banking to conventional, due to its ability to safeguard their rights and interests.

Investing in a Shariah-compliant asset is not just about the ‘feel good’ factor, but it will produce real value and growth to its stakeholders.