Stellar Gets Approval Under Sharia Law
On July 17 2018, Stellar announced that Shariyah Review Bureau (SRB) had certified Stellar as a Sharia-compliant method of money transfer and tokenization of assets. The SRB released a detailed report that compared various aspects of Stellar the the standards set by the Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI). This is huge news for Stellar, as it grants them access to areas of the world where couldn’t have done business before.
The Stellar announcement reads, “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, 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.”
This is a interesting move from the Islamic culture, as they have been hesitant to endorse cryptocurrencies in the past. Some Islamic scholars fear that trading with the volatility of cryptocurrency prices could be on the same level as usury, which is strictly forbidden under Sharia law. On the other hand, muslims such as Mufti Muhammad Abu Bakar, a Sharia adviser and compliance officer at Blossom Finance in Jakarta, have a more accepting attitude towards cryptocurrencies. Mufti wrote a paper describing why he felt that Bitcoin would be permitted under Sharia law.
Muslims account for 23% of the world’s population, so this unexpected decision has now opened up nearly a quarter of the world with the opportunity to use Stellar. Stellar has made it clear that they intend to make the most of this development, saying, “In the next few months, members of the Stellar Development Foundation will meet with global financial institutions and engage them on how to best utilize Stellar in their Sharia-compliant financial services and products. We’re excited to add even greater diversity and inclusion into the Stellar ecosystem”.
Stellar is not that different from some other cryptocurrencies on a technical level, specifically Ripple. Does this mean that Ripple may soon see acceptance by the Islamic world?. Only time will tell for Ripple, but for Stellar the future certainly looks bright.