For the global Muslim community, interacting with crypto comes with some questions: is it halal? Does it follow sharia law? However 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 crossovers appear as the norm. When it comes to faith-based finance, decentralized financial solutions aren’t always the first connection. However 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) which it highlights, ‘ethical finance.’ Under this chapter there is “faith-based finance”. According to its own definition of faith-based finance it “remains a niche within the overall socially responsible investing theme. But [it] involves the idea of using ethics to guide monetary decisions. Religious investments may be governed by beliefs and religious laws.”
Most global religions have their own rules for finances. Often, especially in Abrahamic religions, there are similar concepts with differentiating 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 short-termism, prohibition of non-virtuous investment, obligation to give priority to virtuous savings, prohibition of unjust 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 follow Islam, there is a huge emphasis on “Islamic finance” according to Sharia law, which is their overall code of living. In fact, Islamic finance is a major industry throughout the world. Islam’s financial rules and obligations are essential 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. However, for these products to actually cater to the Islamic world, they must meet a technical specification which is classified as, “halal”. Halal means the product is in alignment with the aforementioned Sharia law.
Halal…
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