Stellar has reportedly become the first open-source protocol to be compliant with Sharia licensing in the money transfer and asset tokenization sector, according to a Stellar’s blog post.
The Shariyah Review Bureau, a top international Sharia advisory agency accredited by the Central Bank of Bahrain, has studied Stellar’s use cases and applications and made available guidelines that let Stellar’s technology be developed in Islamic financial institutions.
By being certified, Stellar will have the chance to improve its ecosystem in locations where financial service providers are required to comply with Islamic financing principles in order to operate. This compliance will let financial institutions that operate in the Gulf Cooperation Council and some parts of Southeast Asia use Stellar technology in their Sharia-compliant products.
While Stellar considers itself “the first” Sharia approved distributed ledger protocol in the financial sector, the NOORCOIN cryptocurrency received the Sharia Certificate from the World Sharia Advisory Committee in March, making it “the first sharia-compliant utility token.”
In April, Bitcoin (BTC) was declared “generally permissible” in terms of Sharia law compliance, as stated in a report made by an internal Sharia advisor from fintech startup Blossom Finance. The report writer, Muhammad Abu Bakar, closes with a cautionary tone, stating that while he views digital currencies to be halal (permissible), in most cases traders should not acquire them for investment reasons.
A month ago, IncuBlock, a South Korean blockchain lab signed a Memorandum of Understanding with Malaysia’s government advisory committee that manages the development of blockchain tech that is allowed under Sharia law. The bodies will work on creating a blockchain platform and a decentralized application (DApp) that will conform to the “social requirements” to be recognized as halal by the Sharia Commission.