Stellar, the seventh-largest cryptocurrency network, has obtained Sharia compliance certification for payments and asset tokenization, the company announced last week. It becomes the first distributed ledger technology (DLT) to obtain Sharia certification in the payments and asset tokenization field.
The Stellar Development Foundation (SDB) announced that the Shariyah Review Bureau (SRB) has examined the capabilities and applications of Stellar, and certified it as a Sharia-compliant vehicle for conducting monetary transactions and tokenizing real-world assets. SRB is a leading international Sharia advisory agency licensed by the Central Bank of Bahrain. SRB has also released a guide that allows for the deployment of Stellar technology in Islamic financial institutions.
This certification will enable Stellar to forge partnerships with financial institutions in regions where financial operations require compliance with Islamic financing principles. This includes 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).
In a 16-page document, the SRB has laid out its justification for awarding Stellar a Sharia certification. The Bureau measured the cryptocurrency and its applications against standards published by the non-profit Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI). “Based on the provided information, SRB conducted its review on the Network’s guides, concepts and related material and did not find any provisions that are non-congruent to the principles of Shari’a. However, the users of the Network seeking to attain Shari’a compliance should take note that merely following the attached guidelines does not automatically ensure compliance to Shari’a”, the SRB concluded.
While Stellar claims to be “the first” Sharia-compliant DLT in the payments and asset tokenization field, another cryptocurrency, NOORCOIN, calls itself “the first sharia-compliant utility token.” It was certified with a Sharia Certificate by the World Sharia Advisory Committee in March.