Exploring Shariah-compliant Islamic Coin: A New Face in the Crypto Space

Set to launch publicly on September 1, Islamic Coin ($ISLM) is an unprecedented amalgamation of digital finance and Islamic principles. By July 2023, the project had secured a staggering US$400 million in funding, and while such a sizable investment doesn't assure success, it certainly highlights the asset as a contender in the high-stakes world of cryptocurrency.

 $ISLM was designed to resonate with the world’s 2 billion Muslims, and this sheer demographic weight could potentially catapult it to the forefront of cryptocurrency ventures. However, the crucial question remains: will the broad audience embrace it? 

Islam-aligned, community-oriented
At present, the global landscape of cryptocurrencies is populated by nearly 22,932 entities, according to CoinMarketCap, many of which have faded or are lying dormant. Only a bit over 8,000 of these currencies is actively engaging in the digital marketplace. In such a saturated environment, Islamic Coin has its work cut out for it — yet; it appears to have an unparalleled unique selling proposition.

The cryptocurrency has been meticulously fashioned to align with the values of practicing Muslims. The potential market for such a targeted initiative is substantial, ranging from estimates of 1.2 billion to 2 billion individuals globally.

Islamic Coin serves as the official currency of Haqq, a community-led block chain network developed by the Swiss-based non-profit HAQQ Association. On the network, $ISLM will possess a limited total supply, and 10% of every issuance will automatically be committed towards philanthropic initiatives.

These distinctive and community-driven functions offer the global Muslim community a robust financial tool tailored for the digital era. This instrument would facilitate frictionless transactions while simultaneously championing philanthropy and promoting innovation.

What is Shariah Compliance in Finance? 
To gain a deeper understanding of the prospects of Islamic Coin, we need to explore what Shariah compliance in the financial sphere means.

●       Islamic law prohibits the imposition or payment of interest, instead advocating for profit-sharing or risk-sharing arrangements. It also doesn't allow involvement in uncertain transactions. Any activities involving gambling, speculation, or alcohol are also forbidden. 

●       Contracts must be transparent, with explicit terms and conditions to ensure all parties involved have a comprehensive understanding of potential outcomes. 

●       It mandates businesses to be socially responsible, necessitating those transactions are underpinned by tangible assets and that a portion of profits is allocated towards charitable causes.

Shariah-compliant finance provides an alternative financial system that matches Islamic values while delivering a suite of sustained financial services. Adopting this system comes with several benefits, including fostering an equitable distribution of wealth and reducing the risk of financial crises through its prohibition of excessive risk-taking and speculative trading. This approach also encourages sustainable development by mandating businesses operate responsibly towards society and the environment.

Islamic Coin aspires to anchor itself upon these principles when launching its cryptocurrency. While these tenets make sense theoretically, their practicality is a different matter. Recent research shows a gradual loosening of ties to Islam in parts of the Middle East, particularly in countries like Iran and among the younger generation. 

So, will adherence to Shariah law alone be sufficient to bolster the popularity of this coin? This will be one of the biggest challenges of the project going forward. 

Understanding Fatwa
The project received a Fatwa last year, confirming its Shariah compliance from a board of distinct leaders in Islamic finance. A Fatwa signifies an "opinion" from an Islamic authority asserting conformity with Shariah principles. This means Haqq can now assert that it has earned recognition and stands at the precipice of a revolution in Islamic finance.

While a positive Fatwa isn't legally binding, it offers assurance of alignment with the precepts prescribed in the Quran and Islamic teachings. However, not all Muslim authorities capable of issuing Fatwas agree with this Fatwa.

Islamic Coin aims to persuade practicing Muslims that its use can economically uplift the Muslim community. It intends to accomplish this while maintaining Islamic values via the application of block chain technology and other innovations.

The Driving Forces behind Islamic Coin
The key figures orchestrating the project present a fascinating amalgam of expertise. One such luminary is Mohammed Alkaff AlHashmi, a computer science engineer and the Co-Founder of HAQQ Network.

The project’s Shariah board behind this fatwa included Sheikh Dr. Nizam Mohammed Saleh Yaquby, who is colloquially known as 'The Gatekeeper' for safeguarding the $2 trillion Islamic finance market. The board also includes Shariah scholar and Islamic finance professor Sheikh Dr. Essam Khalaf Al-Enezi, financial advisor to Dubai Islamic Bank and Emirates Islamic Sheikh Mohamed Abdel Hakim Mohamed, and Sheikh Dr. Mohamed Zoeir: a Shariah scholar and Islamic banking expert with 45 years of experience. The board’s remaining members are Sheikh Juma bin Maktoum Al Maktoum, Sheikh Mohammad bin Khalifa bin Mohammad bin Khalid al Nahyan and Sheikh Khalifa bin Mohammed bin Khalid al Nahyan.

In addition to its robust Shariah board, an executive board directs the project’s key operations and maintains oversight. This includes individuals like Hussein Mohammed Al Meeza, an Islamic banker affiliated with Dubai Islamic Bank, and Peter Raffety, a fund manager at the Abu Dhabi Investment Authority. To complete the team, Dubai's ruling family member Sheikha Mariam Suhail Obaid Suhail Al Maktoum brings unique perspectives to the table.

Charitable Endeavors
One of the core virtues of this coin is its inherent philanthropic approach. Yet, the potential of Islamic Coin extends beyond this generosity. There is a palpable optimism around the project's future, predicated on a seemingly modest estimation. If only a small fraction (3% to 4%) of Muslims who currently engage in crypto currency trading decide to join the network, it could catapult the coin to popularity levels comparable to Bitcoin.

Such a trajectory could inflate the value to an astronomical $1 trillion valuation. Consequently, per its philanthropic principle, $100 billion would be channeled into community work and charitable initiatives.

Advantages over Bitcoin
Bitcoin is the leading cryptocurrency by market capitalization and enjoys extensive adoption and real-world utility. However, Islamic Coin presents an intriguing alternative for the Muslim community. While Bitcoin is globally recognized, it has been deemed 'haram' (impermissible) by several Muslim authorities due to its non-compliance with Islamic law. The project’s adherence to Shariah principles differentiates it from other cryptocurrencies and could give it a distinct advantage in appealing to practicing Muslims.

Final Thoughts on Islamic Coin
Islamic Coin's launch marks a pivotal moment in the cryptocurrency sphere. A digital currency that is Shariah-compliant and tailored to meet the needs of practicing Muslims may possess the unique appeal needed to make waves in the crypto market.

However, there remain hurdles to overcome. Not all Muslims align with its principles, and the fatwa doesn't necessitate unanimous approval from Muslim authorities. Furthermore, the coin will be up against robust, well-established Islamic financial systems and institutions that already operate in accordance with Shariah principles.

ISLM Co-Founder Mohammed Alkaff expressed pride in creating a "Shariah-compliant, immutable, independent financial system that serves the Muslim community and beyond." He called it "a pillar of stability, intertwined with values that are future-proof in a changing world.”

By the last quarter of 2023, the project aims to have integrated 20 payment firms from the Middle East and North Africa regions, but the central question remains: will Islamic Coin reach and surpass the level of adoption of Bitcoin and other top currencies? The potential is there, but only time will tell.

ePaper - Nawaiwaqt