The UAE is heralded as heaven on earth by many and is a playground for the rich and famous. However, for crypto enthusiasts and traders it can be a bit of a minefield – the same goes for much of the Middle East. Fortunately for citizens in the UAE, they will soon be able to trade on the first Sharia-compliant crypto exchange. There are more than 1.8 billion people worldwide that are Muslim and these people currently do not have a crypto exchange than can guarantee their crypto trading is halal. Saudi Arabia has condemned trading cryptos as “illegal”, due to the fact it had a shady past and was once used for illegal activities, however – according to the DEA – this is no longer the main use of digital currencies.
What is a Sharia Compliant Crypto Exchange?
Simply put, a Sharia-compliant crypto exchange prohibits activities that are considered haram under Islamic law. This means that the exchange won’t permit any tokens to be listed that are related to gambling, while the exchange can’t offer margin trading, short selling, or day trading.
In addition to these regulations, on the First Islamic Crypto Exchange (FICE) states that it will only list cryptocurrencies that have been approved by the Sharia advisory board. Unfortunately, only two cryptos have received the rubber stamp of approval from the Sharia advisory board, those are Bitcoin and Stellar.
Why Has it Taken so Long?
There are more than 250 crypto exchanges around the globe, but this is the first Sharia-compliant crypto exchange. Some of our readers might be wondering why it has taken so long for an exchange like FICE to launch. Despite the gargantuan number of people that subscribe to Islam globally, there is only one cryptocurrency that would be listed on the exchange for the time being. Until other cryptos get a Sharia compliant rubber stamp of approval, they cannot be listed or traded in a halal manner. This is the biggest reason for nobody previously having invested any time in creating such an exchange.
Still a Chance to Turn Things Around
Sharia scholars haven’t come out and claimed that all cryptos are haram (or prohibited), but they have advised Muslims around the world to be cautious and steer clear of them until they can be assessed properly. This implies that there is still a good chance that other cryptos could eventually be listed on Sharia compliant exchanges such as FICE. However, it could be while before we see any other cryptos receive this approval.
If a mufti – a Muslim legal expert given the power to declare things halal or haram – can be persuaded that a range of cryptocurrencies are halal, then we could see a wave of new investors flocking to FICE. This would lead to more Sharia-compliant exchanges opening up – but this is an unlikely scenario for another few years.
While ADAB Solutions appears to have things worked out for its FICE exchange, it still has a long way to go. It is set to officially launch in July 2019. Sharia-compliant cryptocurrencies seem to change vastly depending on who you ask. If you asked the Saudi Arabian government they would tell you that only Stellar is halal, but in London one Mosque has called Bitcoin and Ether halal.
If you are looking to invest in Sharia-compliant cryptos, it is best you speak with your local mufti to get their direct opinion on the current state of affairs.