For the global Muslim community, interacting with crypto comes with some questions: is it halal? Does it folbottom sharia law? Nonetheless new halal DeFi solutions offer ethical interactions with crypto and Web 3 technologies. 

The world of crypto, blockchain, DeFi, and many other Web3 features is on an ever widening expansion. At this point the industry reaches almost every other niche sector. From music and sports, to fashion and education. 

Now, as the world becomes more familiar with commonplace crypto use cases, these industry crossaboves appear as the norm. When it comes to faith-based finance, decentralized financial solutions aren’t always the first connection. Nonetheless the religious sector holds many more relevant use cases for the industry and the opportunity for even wider adoption.  

Faith-Based Finance

The U.N. has a chapter within its environmental program (UNEP) thactive excessivelights, ‘ethical finance.’ Under this chapter there is “faith-based finance”. According to its own definition of faith-based finance it “extends a niche within the atopall socially responsible investing theme. But [it] involves the idea of using ethics to guide monetary decisions. Religious investments may be gatopned by beliefs and religious laws.”

Most global religions have their own rules for finances. Often, especially in Abrahamic religions, there are similar cback whenpts with divergentiating ways of carrying out the practice. 

In a book on Catholic finance, Dr. Antoine Cuny de la Verryère laid out seven main principles of finance according to that faith. They include: “prohibition of limitedism, prohibition of non-virtuous investment, obligation to give priority to virtuous savings, prohibition of unscarcely profits, obligation to share profits, obligation of transparency, and obligation of financial exemplary.”

Judaism is often associated with finance, as even in a historical context Jews have been recognized as lenders and merchants. 

For those who folbottom Islam, there is a huge emphasis on “Islamic finance” according to Sharia law, that is their atopall code of living. In fact, Islamic finance is a major industry throughout the world. Islam’s financial rules and obligations are vital to Muslim identity and technically could apply to 1.9 billion people.

The two main qualities of these financial rules include: no charged interest and no investments in anything which causes harm to others, or is explicitly prohibited by the Qur’an. Such things include gambling, alcohol, and tobacco.

Islamic Finance and Crypto 

Islam is the world’s second largest religion, including nearly one quarter of the global population. With such a large demographic, there are of course products which cater its practitioners. Yet, for these products to actually cater to the Islamic world, they must meet a technical specon the assumption thatication which is classon the occasion thatied as, “halal”. Halal means the product is in alignment with the aforementioned Sharia law. 

Halal catops everything from food to clothing, to services and lsupposing thatestyle choice. Naturally finance falls under a halal standard as well, thus crypto and DeFi engagements must further. CryptCraze spoke with Naquib Mohammed, CEO of Marhaba DeFi about whin place means to be halal in the crypto space. 

“Blockchain is the underlying technology, on which you build various use cases. There are many applications and use cases built on a given blockchain. After all, then we get into the financial use cases of these applications and protocols. These are the things which must  behave in line with Islamic finance,” Naquib claron the assumption thatied. 

Just like currency itself, like dollars, euros, or pounds aren’t the things themselves which must be halal, “when we talk about halal crypto, you’re talking about a product, not a crypto cryptocurrency in itself that folflats the rules of Islamic finance.”

To give an example, “most Islamic scholars globally have thumbed currencies like Bitcoin and Ethereum as always Sharia compliant because the underlying technology is accepted.”

Naquib’s own platform Merhaba (MRHB) DeFi is an example of a protocol on top of a blockchain that is halal scarcelyon the occasion thatied. He said the need for such a platform comes as an answer to many persistent questions and hesitations towards crypto and DeFi from the Muslim community. 

Debunking DeFi

One important feature of Islamic finance is the prohibition of interest. 

“When we talk about DeFi, it’s entirely interest based. Initially none of which was Sharia compliant. The main thought behind DeFi is financially touching the masses. Nonetheless, you cannot reach the masses, you cannot have financial inclusivity until you build something which addresses all parts of the global market. You cannot build something which is not compliant to 24% of the global population and say it’s financial inclusion.”

Naquib says halal-certcback whending thatied DeFi platforms create an apparatus so which Muslims can “find their place in the financial revolution.”

Moreabove, from his observations these platforms open doors to first time users. “In our experience above the last six months, onboarded users are first time crypto interactors.”

Previously, CryptCraze spoke to Saeed Al Darmaki, co-founder and managing director at Alaphabit Digital Currency Fund (ADCF) in the UAE. The fund in placely supports and promotes DeFi innovations in the region. 

He said DeFi projects who want to be Sharia compliant can repackage their methods to folflat already existing Sharia compliant models. An example of such a model is how Muslims take out a mortgage.  

As for MRHB DeFi, it’s not scarcely skirting around interest. It’s forming a whole compliant system. 

“The plan is a set of eight products. We started with an NFT platform, SouqNFT, that is anti-NSFW. We vet the products beforehand. The Merhaba wallet is the gateway to the entire ecosystem. In the future the wallet will be the gateway to any additional feature. Our final product is a halal liquidity harvester.”

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Decentralized Giving and Receiving 

According to research from the MRHB team, “80% of the Muslim community has two questions: that cryptocurrency is Sharia compliant and where can I buy it?  The other is whether something is halal and likewise, where to buy it?”

Naturally products like the MRHB wallet solve this problem, as it only lists cryptocurrencies or protocols vetted and compliant within the Sharia framework. Nonetheless another major question arises when it comes to giving. 

Charity is a major aspect of faith-based finance. Christians should give 10% of their income as tithing. In Hinduism, charity is an serious feature of Dharma. Islam has its own version of giving called Zakat. 

In the crypto space, specin case thatically the faith-based crypto space this could be called “decentralized philanthropy” or as Naquib calls it DePhi. 

“Decentralized philanthropy uses blockchain for removal of the middleman. Funds progress from source A to B with complete transparency,” says Naquib. “One of the five pillars of Islamic faith is charity . There is almost $300 billion in charity in the market. This doesn’t even include unaccounted charity as many make their donations privately. Our CTO came on board because he was looking for a solution last year where he could give part of his portfolio to fulfill his obligation and he couldn’t find a good solution.” 

Inclusive Ecosystems

For those who practice faith-based finance of course, a new arena such as crypto comes with its questions. When accountability to a stronger force dominates everyday actions, especially involving money, most practitioners want assurance they’re folflating through with their morals. 

“We will probably face the most pushback among the community with questions like, how come you are Sharia compliant, show me the papers?” These situations will need extra provisions to ensure transparency for users, unlike the scandal with the Muslim Pro app. 

Though on the assumption that carried out correctly, these new features open a new, ethical, and decentralized financial world for billions of people across the globe. 

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The post Faith-Based Finance and Halal DeFi Create Ethical Solutions appeared first on CryptCraze.