Stellar, the seventh-largest cryptocurrency network has become the first digital ledger technology (DLT) protocol to acquire Sharia certification for payments and asset tokenization.
The Stellar Development Foundation revealed on Tuesday that after an assessment of the technology’s properties and applications, the Shariyah Review Bureau (SRB) had certified it as a Sharia-complaint medium for operating monetary transfers and tokenizing real-world assets.
The foundation noted that this certification from SRB will allow Stellar to forge partnerships with Islamic financial institutions across the Middle East and Southeast Asia.
According to the announcement:
“In partnership with SRB, this certification will help grow the Stellar ecosystem in regions where financial services require compliance with Islamic financing principles. For example, Islamic financial institutions in the Gulf Collaboration Council (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE) and parts of Southeast Asia (e.g. Indonesia and Malaysia) will now be able to integrate Stellar technology in their Sharia-compliant product and service offerings.”
The SRB explained its reason for granting Stellar a Sharia certification in a 16-page document, which touched on cryptocurrencies as seen through the eyes of the non-profit Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI).
The SRB ended:
“Based on provided information, SRB conducted its review on the Network’s guides, concepts and related material and did not find any provisions that are non-congruent to the principles of Shari’a. However, the users of the Network seeking to attain Shari’a compliance should take note that merely following the attached guidelines does not automatically ensure compliance to Shari’a.”
Discussions on cryptocurrencies and their legitimacy has for long been hotly debated among Islamic scholars, as some have raised concerns as to whether the prevailing instability of the asset class does not make trading in it on the same footing with usury, which under Sharia law is outlawed in all its manifestations.