In a wonderful first, Stellar, an American blockchain company, recently became the first DLT firm in the world to be certified by the Sharia law. This certification could also bring new opportunities to the firm and better adoption of their Lumens (XLM) tokens in Islamic nations.
According to the company website, the Shariyah Review Bureau (SRB), an advisory agency on Islamic law licensed by the Central Bank of Bahrain, has reviewed the cryptocurrency and blockchain and finds it compliant. Assistant general manager of SRB Mansoor Ahmed said:
“For the blockchain technology there was no issue, the main thing we needed to consider was the use of the underlying cryptocurrency.”
Fintechs Move to New Frontiers
A large part of the Southeast Asian and South Asian population follows Islam. The Middle East remains one of the most valuable but difficult to penetrate markets. On the other hand, several countries in Africa also have a significant presence of Islam. In such a situation, fintech needs endorsements from Islamic scholars who have decided in favor of digital currencies and blockchain technology.
It is important to note that Islamic finance focuses on physical assets and real economic activity, instead of speculative investments and interest payments.
Stellar is making a fresh case for adoption in markets traditionally left out of the US-Euro crypto scenario. The Stellar Lumens coin is currently the seventh largest digital currency in the world and has a market capitalization of $4.3 billion. Making inroads into these newer markets, creating products that comply with religious laws and getting an outspoken endorsement from scholars could pave the way for the cryptocurrency to increase its market cap further.
Stellar Follows Roads Less Taken
The company has taken a different route from other blockchain firms as the company has been exploring partnerships with several financial firms of the Gulf said Lisa Nestor, director of partnership at Stellar:
“We have been looking to work with companies that facilitate remittances, including in the United Arab Emirates, Saudi Arabia, and Bahrain. It’s a huge market.”
According to Nestor, the firm has been well aware that Sharia compliance certification helped them gain better acceptance in these markets.
She also said that Stellar has an ongoing partnership with IBM, which could help them create blockchain solutions for solving problems other than cross-border payments.
While some Gulf nations have been skeptical of the application of digital currencies, Bahrain has been surprisingly positive. The Economic Development Board of Bahrain met with Stellar representatives earlier last year, which led to broad developments. On the other hand, Saudi Arabia’s central bank signed a deal with Ripple for using blockchain technology so that banks can use it to settle payments in the Kingdom.