LONDON: Experts told Arab News that Muslim nations should move quickly to build shared legislative, financial, and religious frameworks in order to profit from the global cryptocurrency development.
They also emphasized that the states that act earliest would benefit the most.
Bitcoin achieved an all-time high of $68,521 per coin earlier this month, but Indonesia’s National Ulema Council deemed all cryptocurrencies haram (forbidden by Islamic law) barely a week later, citing the ostensibly speculative nature of investments in the currency-turned-commodities.
These two incidents reflect a larger worldwide fight in crypto markets, as governments deal with this new form of money and strive to build financial and legal frameworks that incorporate it into current institutions.
These two incidents reflect a larger worldwide fight in crypto markets, as governments deal with this new form of money and strive to build financial and legal frameworks that incorporate it into current institutions.
This is also true for the world’s Muslim nations, which together account for about 1.9 billion people.
“In the Organization of Islamic Cooperation’s 55-plus nations, the status and stance (of cryptocurrencies) differs greatly from one country to another, and even in some cases is inconsistent within the same country,” Bashar Al-Natoor, Fitch Ratings’ global head of Islamic Finance, told Arab News.
“This is true not just in their regulatory responses, but also in their fundamental language and knowledge, leave alone the degree of improvements in the related ecosystem, such as regulatory frameworks and infrastructures.”
The incorporation of Shariah rules into Islamic financial systems, according to Al-Natoor, makes these fundamental differences among markets considerably “cloudier.”
The lack of academic agreement on the status of cryptocurrencies in the Middle East and worldwide has confused the waters for Muslim investors in Indonesia, much as a religious scholar’s pronouncement that cryptocurrencies are haram did.
While experts cite the currencies’ volatility, seeming lack of inherent worth, high risk, and other considerations as justifications for banning, Al-Natoor noted that the usage of cryptocurrencies provides prospects for Muslim countries.
“Indeed, a number of OIC nations have started to explore this arena,” he added, “and it will be fascinating to see how legislation emerges.”
The UAE and Bahrain are among the countries leading the push on cryptocurrencies, according to Ibrahim Khan, the CEO, and co-founder of Shariah financial advising service IslamicFinanceGuru.
“Bahrain has been a leader,” Khan remarked, despite the fact that other nations, such as Pakistan, have deemed cryptocurrency trading illegal.
“The reality of the matter is the cat is out of the bag,” Khan says. It’s futile to prohibit it at this time.”
Bahrain took a step forward in January by introducing a Shariah-compliant cryptocurrency trading platform open to citizens of Saudi Arabia, the United Arab Emirates, Kuwait, and Oman.
“By moving faster, they are able to capture a lot of the early attention and money pouring via cryptos; a lot of crypto money has gone to Dubai and Bahrain in particular.”
Khan stated that IslamicFinanceGuru’s cryptocurrency advice is one of the company’s most popular offerings because it provides crucial guidance in an environment where there is a lot of noise but little actual direction.
“The reason that page is popular is that there isn’t really any informed analysis or fatwas (religious edicts) out there,” he continued, “other than extremely reactionary fatwas declaring ‘it’s all haram,’ or other more nuanced fatwas saying it depends on the specific coin.”
“However, no one bothers to advise those who are investing or trading what is or is not permitted. In this sector, Muslim nations are severely lacking in leadership.”
“But,” Khan said, “this is the next major wave,” and “the Muslim community as a whole has to move a lot quicker on delivering clear direction and clear lines of thought on the Islamic side of things when it comes to cryptocurrencies.”
He believes that if Islamic nations had a consistent strategy to dealing with cryptocurrencies, it would be “very beneficial.”
“A lot of people pay attention to what their government says, and if their government makes ominous sounds about it, they will usually shun it… It will be more difficult to get into and out of cryptocurrencies.”
“Governments saying, ‘We’re really pretty happy about this,'” Khan added, “would lead to a lot more access, and a lot more business in enabling individuals to get into this things.”
“In the Organization of Islamic Cooperation’s 55-plus nations, the status and stance (of cryptocurrencies) differs greatly from one country to another, and even in some cases is inconsistent within the same country,” Bashar Al-Natoor, Fitch Ratings’ global head of Islamic Finance, told Arab News.
“This is true not just in their regulatory responses, but also in their fundamental language and knowledge, leave alone the degree of improvements in the related ecosystem, such as regulatory frameworks and infrastructures.”
The incorporation of Shariah rules into Islamic financial systems, according to Al-Natoor, makes these fundamental differences among markets considerably “cloudier.”
The lack of academic agreement on the status of cryptocurrencies in the Middle East and worldwide has confused the waters for Muslim investors in Indonesia, much as a religious scholar’s pronouncement that cryptocurrencies are haram did.
While experts cite the currencies’ volatility, seeming lack of inherent worth, high risk, and other considerations as justifications for banning, Al-Natoor noted that the usage of cryptocurrencies provides prospects for Muslim countries.
“Indeed, a number of OIC nations have started to explore this arena,” he added, “and it will be fascinating to see how legislation emerges.”
The UAE and Bahrain are among the countries leading the push on cryptocurrencies, according to Ibrahim Khan, the CEO, and co-founder of Shariah financial advising service IslamicFinanceGuru.
“Bahrain has been a leader,” Khan remarked, despite the fact that other nations, such as Pakistan, have deemed cryptocurrency trading illegal.
“The reality of the matter is the cat is out of the bag,” Khan says. It’s futile to prohibit it at this time.”
Bahrain took a step forward in January by introducing a Shariah-compliant cryptocurrency trading platform open to citizens of Saudi Arabia, the United Arab Emirates, Kuwait, and Oman.
“By moving faster, they are able to capture a lot of the early attention and money pouring via cryptos; a lot of crypto money has gone to Dubai and Bahrain in particular.”
Khan stated that IslamicFinanceGuru’s cryptocurrency advice is one of the company’s most popular offerings because it provides crucial guidance in an environment where there is a lot of noise but little actual direction.
“The reason that page is popular is that there isn’t really any informed analysis or fatwas (religious edicts) out there,” he continued, “other than extremely reactionary fatwas declaring ‘it’s all haram,’ or other more nuanced fatwas saying it depends on the specific coin.”
“However, no one bothers to advise those who are investing or trading what is or is not permitted. In this sector, Muslim nations are severely lacking in leadership.”
“But,” Khan said, “this is the next major wave,” and “the Muslim community as a whole has to move a lot quicker on delivering clear direction and clear lines of thought on the Islamic side of things when it comes to cryptocurrencies.”
He believes that if Islamic nations had a consistent strategy for dealing with cryptocurrencies, it would be “very beneficial.”
“A lot of people pay attention to what their government says, and if their government makes ominous sounds about it, they will usually shun it… It will be more difficult to get into and out of cryptocurrencies.”
“Governments saying, ‘We’re really pretty happy about this,'” Khan added, “would lead to a lot more access, and a lot more business in enabling individuals to get into this things.”