The eye of start-ups from the Islamic world on the cryptocurrency market

Tehran (IQNA)-As digital assets become mainstays of the economy, Muslims, like other investors, face sharp price swings as well as Sharia concerns.

Digital currencies are growing in the Islamic world and start-ups are planning to provide Islamic services in this area. The popularity of digital currencies has increased and according to “CoinMarketCap”, their total value now stands at $1.2 trillion worldwide.

Ibrahim Alkord, a 25-year-old entrepreneur, built a venture capital group focused on digital assets and halal startups, and is now working to find sharia-compliant cryptocurrencies.

Mazin Khalil, deputy director of Islamic financial services at Grant Thorton in Abu Dhabi, told Middle East Eye: “There is no central authority in Islam that declares digital currency halal or haram. Skeptics view it as a virtual activity, and traditionally even fiat currencies such as the US dollar are prohibited, as they are not linked to tangible assets like gold, although most Islamic scholars have overcome this barrier, “excessive ambiguity” in cryptocurrency pricing, could be construed as a form of gambling.”

Despite the long uncertainty of some, digital currencies have caught the attention of investors and in 2021, Pakistan ranked third in the world for cryptocurrency acceptance. India came second with 15% of the population Muslim, and Nigeria, a country where half the population follows Islam, came sixth.

Ibrahim Khan, co-founder of IslamFinanceGuru, a platform focused on halal investing, said: “At this stage, control is out of reach and large swaths of the Muslim population are using cryptocurrency. “lslamicFinanceGuru” has a list of halal digital assets that have become go-to conduits in the Islamic cryptocurrency world. Products considered halal are superior when they are the products of Muslim investors. The company consults with Shariah scholars to determine if the currencies in question relate to prohibited activities like interest or alcohol, and Bitcoin, Atrium and Tetra are all considered halal.”

In this space, few startups have sensed an opportunity and move beyond simple authentication tokens. One such company is “Marhaba De-Fi”, launched in December 2021, which bills itself as the first halal decentralized financial system in the world. Dubai-based Marhaba De-Fi chairman Khalid Hawladar told the Middle East Eye the company was in high demand among Muslim Gen Z investors (born between 1990 and 2010) for its halal products: “This new generation is socially conscious and thoughtful, and what we see are young Muslims expressing their morals through their religion. Marhaba’s mission goes beyond presenting a halal service. The company has worked in the world of traditional finance for more than two decades and witnessed the financial crisis of 2008, which reminded us of the risks of fiat money and interest rates. Using assets to create new value and return is one of the most permitted things that has ever existed, and we would like to make this option available to users. Islamic finance relies heavily on profit sharing. Our company has its own halal cryptocurrency wallet called “Sahal Wallet” and its own token. In the future, Marhaba intends to offer cash withdrawals and give investors a legal way to lend their coins to exchanges. Marhaba is also working on gold-based physical tokens. Islamic finance is a $3 trillion industry, if we could get 1% of that market we will have $30 billion at our disposal.”

Another company active in this industry is “Fasset” which recently completed a software environment test in Bahrain, and is taking a big step into the world of cryptocurrencies. The company has received a license to establish a digital currency exchange in Indonesia, and is in the early stages of offering P2P (peer-to-peer) digital currency lending in Pakistan.

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Daniel Ahmed who co-founded the company after working as a consultant to the Prime Minister’s Office of the United Arab Emirates, said: “Cryptocurrency is a product really designed for emerging markets in the Islamic world. Digital currency and decentralized finance offer unique solutions in countries where political risk is high and governments are devaluing money. In Turkey last year, people flocked to digital assets as the pound plummeted. Bitcoin usage grew nearly 600% from April 2020 to 2021, and digital currency transactions quadrupled. Cryptocurrency’s potential to help solve problems such as the high number of people without bank access in developing countries, and increased access to financial services, has led many to overcome their doubts about its compliance with the sharia. We take religious matters seriously when manufacturing our products. Digital assets in themselves are neither compliant nor contrary to Islamic law, but must be considered on a case-by-case basis. Changing people’s minds on Islamic markets towards digital currencies remains a major challenge for the industry.”

Mark Zubov, founder of Dubai-based startup ‘Umma Finance’, which seeks to connect Halals cryptocurrency investors, said: “The main competitors are not the investment platforms but the money ‘under the mattress’. “. We are making efforts to educate people about the options for investing in emerging market companies”.

As these new ventures begin to emerge, more divisiveness may appear. The value of cryptocurrencies has fallen sharply in recent weeks. Bitcoin has fallen about 50% since hitting its peak, and nearly $1 trillion in digital currency has been lost since last year.

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Salman Massoud, manager of the Australian Gulf Capital venture capital fund focused on Islamic finance, which he invested in Marhaba, is not upset by the presence of cryptocurrencies in the market, and says his investments are term and that his company is actively looking for new projects: “We see incredible opportunities for startups that both serve Muslims in the West, with halal options, and bring this technology to developing countries. Australian Gulf Capital recently opened an office in Abu Dhabi, and the United Arab Emirates is providing us with valuable support. The United Arab Emirates are competing to become an industrial hub. “Bainance” (Cryptocurrency Online Exchange) opened a store in Dubai this year, and in April, Abu Dhabi authorized “Cracken” (American financial services company) to operate a virtual asset exchange. Many countries in the Middle East are supporting this industry and this will definitely help the Islamic world.”

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The eye of start-ups from the Islamic world on the cryptocurrency market


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