Stellar, an open-source platform for distributed payments, is reportedly the first distributed ledger protocol to obtain Sharia compliance certification in the money transfer and asset tokenization field, according to a Stellar blog post published July 17.
The Shariyah Review Bureau, a leading international Sharia advisory agency licensed by the Central Bank of Bahrain, has examined the capabilities and applications of Stellar and released guidance that allows for the deployment of Stellar technology in Islamic financial institutions.
With the certification, Stellar will ostensibly be able to enhance its ecosystem in regions where operation in the field of financial services requires compliance with Islamic financing principles. This move will allow financial institutions located in the Gulf Cooperation Council and some parts of Southeast Asia to implement Stellar technology in their Sharia-compliant product and service offerings.
While Stellar calls itself “the first” Sharia approved distributed ledger protocol in the area of money transfers, cryptocurrency NOORCOIN was certified with a Sharia Certificate from the World Sharia Advisory Committee in March, calling itself “the first sharia-compliant utility token.”
In April, Bitcoin (BTC) was recognized as “generally permissible” under Sharia law according to a report released by an internal Sharia advisor to fintech startup Blossom Finance. The author of the report, Muhammad Abu Bakar, concludes with a warning, saying that while he considers digital currencies to be halal (permissible), in most cases traders should not purchase them for investment purposes.
Last month, South Korean blockchain lab IncuBlock signed a Memorandum of Understanding with a Malaysian government advisory committee for blockchain tech development permissible under Sharia law. The entities will work on developing a blockchain platform and a decentralized application (DApp) that will meet the “social requirements” to be considered halal by the Sharia Commission.
