Syeda Qandeel Zehra
Islamic Coin (ISLM) is a Sharia-compliant digital currency, set to be released on September 01, 2023. The creators of the coin have the goal of revolutionizing Islamic finance. In this article, we will explain what that means and what the cryptocurrency will be used for, and the hurdles it could be facing. We will also look at the potential of its reach — if it appeals to the estimated 2 billion Muslims in the world, sheer numbers may tip this cryptocurrency into a leading proposition. But will it be accepted by those who it is built to appeal to?
As of July 2023, Islamic Coin has raised US$400m in funding. While this mammoth investment does not guarantee success, it does put it into the category of a cryptocurrency worth watching.
Introduction to Islamic Coin (ISLM)
According to CoinMarketCap, there are around 22,932 cryptocurrencies in the world, however many of these are “dead’ or forgotten about. Just over 8000 cryptocurrencies are active. As a new crypto, Islamic Coin is late to the game and needs a unique selling point. And, it seems to have one.
Islamic coin was developed to cater specifically to the values of practising Muslims. This is potentially a huge market, estimated to be anything from 1.2b to 2b worldwide.
Islamic Coin (ISLM) is a digital currency that adheres to the principles of Sharia law. This makes it the first Sharia-compliant cryptocurrency.
It is set to go on sale on the 1st of September, and the company issuing it, the Haqq Blockchain, will use the US$400m in funding to launch.
What does Sharia-compliant mean?
To be Sharia compliant means sticking to principles in Islamic law. But what does that mean in terms of finances?
-Islamic principles prohibit the charging or payment of interest. Rather, it promotes profit-sharing or risk-sharing arrangements.
-Engaging in uncertain transactions is not allowed. Contracts should have clear terms and conditions, and everyone involved should have a good understanding of the potential outcomes.
-Activities that resemble gambling or speculation are not allowed, if gains are based on chance rather than genuine trade.
-Funding of concepts that are forbidden in Islam are also not allowed (alcohol, gambling, pork, and unethical business practices).
-Businesses must be socially responsible and good for the well-being of society and the environment.
-Transactions should be backed by tangible assets.
-Excessive risk-taking is discouraged.
-A percentage of profits must go towards charitable endeavours.
Sharia-compliant finance is an alternative financial system that upholds Islamic values while providing a range of financial services. It is these principles that Islamic Coin hopes to ride upon when it sells its cryptocurrency.
This makes sense in theory. But what about in practice? Recent studies suggest people are loosening their ties to Islam in some parts of the Middle East, especially in countries such as Iran. And, especially if they are young. So is being Shariah-compliant going to be enough to make this coin popular?
What is a Fatwa?
Islamic Coin was recently given a fatwa in approval of its activities, by Sheikh Dr. Nizam Mohammed Saleh Yaquby. He is known as ‘The Gatekeeper’ of trillions of dollars in Islamic financial products.
A fatwa is an “opinion” from an Islamic authority to say that it follows Sharia principles. Islamic Coin now claims that it has gained recognition and is poised to revolutionise Islamic finance.
A positive Fatwa is not legally binding, but it can provide reassurance that it aligns with the principles outlined in the Quran and Islamic teachings. Not every Muslim authority able to issue fatwas agrees, however, with the fatwa of Islamic Coin.
Islamic Coin hopes to convince practicing Muslims that by using the crypto, it can financially empower the Muslim community, while upholding the values of Islam through blockchain technology and innovation.
Big names behind Islamic Coin
The Islamic Coin overlords are an interesting mix. First up is computer science engineer Mohammed Alkaff, the Co-Founder of ISLM. Another prominent figure involved in the project is Sheikh Dr. Nizam Mohammed Saleh Yaquby, an expert in the US$4.2 trillion Islamic financial market. Hussein Mohammed Al Meeza is an Islamic banker associated with Dubai Islamic Bank. Also, on board is Peter Raffety who is a fund manager at the Abu Dhabi Investment Authority. And, there is a princess on board, from Dubai’s ruling family, Her Highness Sheikha Mariam Suhail Obaid Suhail Al Maktoum, among others.
Charitable donations
Farid says that another positive attribute of this coin is that whenever this coin is minted, 10% of the value is stored and will be used for charity and for the benefit of the Muslim community. But, he particularly likes its potential.
“If only 3% to 4% of Muslims who trade in cryptocurrencies join the network of Islamic coin, then this coin can reach the potential of Bitcoin and become very popular. If this happens, its value will reach $1 trillion, so $100 billion will be used for community work and charity.”
He says he thinks the Muslim community should go into crypto, and especially Islamic coin. “We should keep on doing research about it so we don’t get behind the rest of the world. We Muslims should understand the crypto world and take advantage of it for our community.”
Edge over Bitcoin
Bitcoin is the most popular cryptocurrency by market cap. Bitcoin is way more widely adopted and can be spent in the real world already. So why would Muslims adopt Islamic Coin when they could just use Bitcoin?
A factor could be that multiple Muslim authorities have branded Bitcoin “haram” (not acceptable). Being Sharia-compliant makes Islamic Coin different to other crypto, so it could give it an edge.
Islamic Coin: Conclusion
Islamic Coin could represent a groundbreaking development in the crypto space. A Sharia-compliant digital currency that matches the requirements of practicing Muslims might just get the cut-through needed to be the next big crypto.
However, not all Muslims agree with its principles, and not all Muslim authorities agree with the fatwa. These sentiments could affect its uptake. Also, the coin will need to compete with well-established Islamic financial systems and institutions that already adhere to Sharia principles.
ISLM Co-Founder Mohammed Alkaff said in a statement, “We are proud to build and deliver a Sharia-compliant, immutable, independent financial system that serves the Muslim community and beyond. A pillar of stability, intertwined with values that are future-proof in a changing world.”
By Q4 2023, the project says it will have integrated 20 payment firms in the Middle East and North Africa (MENA) region.
Will Islamic Coin usurp Bitcoin as the biggest crypto? Or will anonymity be the end result, just like a bucket tonne of other crypto hopefuls?—Hamari Web
