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Late last week the Indonesian Ulema Council declared that cryptocurrency as a means of payment or as a commodity to trade was unlawful for Muslims to participate in. While the Ulema Council does not hold any legal power they are the top body is Islamic scholars in Indonesia. Indonesia itself is actually the country with the world's largest Muslim population in the world which makes the Ulema Councils' decisions or announcements all the more impactful.
Now if you are like me and wondering why would a religious authority state that it is forbidden to be used you might wonder? Well according to the head of the Council due to the uncertainty, wagering, and harm which all violate central tenets of Islamic Law. I talked to a friend of mine about this as I am a Christian and so I do not really understand the parameters of Islamic Law and he is a practicing Muslim he was more than happy to explain it to me. Under Islamic Law things like alcohol are illegal and the way you dress is regulated but another important thing to note is gambling is also prohibited and overcharging for goods is also something that is looked down upon. This last one focuses on really ripping off the people who are dependent on your goods and/or services.
With Islam being the largest, or second-largest, religion depending on who you are talking to there is a huge need for a DeFi application to satisfy the needs and become shariah-compliant. This though really could not be done with just computer programmers as you would also need to have Islamic Scholars to help you make sure that it would be acceptable within the Islamic Laws and rules. This is what Marahaba Finance has done. They put together a team of experts in a variety of fields like finance and technology but also in Islamic finance and technology as well!
The development team aims to bridge the gap that is currently faced with creating a Shariah compliment financial system that can be linked to the blockchain world! Further, the team really looked in-depth to see what could be used to make this happen. They leveraged the smart contracts to make sure that scamming could not take place, they created and launched a non-custodial wallet that has a filter that only allows in compliment tokens so that the pump and dump microcap coins are not able to get in. For their NFT market place, users do not need to know to code and can upload their artworks where the smart contracts witl convert it into an NFT for the artist.
Like other DeFi platforms this platform also has liquidity harvester that they talk about functioning like a traditional savings account. The yield for this section of the platform works has the APY listed a 5-15% and that a cross-chain DEX will be utilized to limit both slippage and transaction costs overall. To remain Shariah compliment the platform offers interest free lending and borrowing which is honestly not really heard of in the DeFi space right now. They also include a decentralized philanthapy option via the DePhi protocol that functions out of the wallet as well and functions to keep both the privacy and anonymity. Following the new trend of launchpads MRHB also has it own and the programs that they help fund and launch will also have to be Sharaiah law compliment. Lastly the development team is transitioning to a DAO and the DAO will hand over governance tokens to users to be able to partake in the choices and decisions of the platform moving forward.
With all of these protections in place it makes me wonder if the Ulema Council will change its mind or at least exclude this DeFi platform from its declaration against cryptocurrency and DeFi with these protections in place? MRHB DeFi has said it will be free from interest/usury (Riba), excessive risk (Gharar), and financial transactions which are similar to gambling (Maysir). Which should satisfy the issues that were pointed out by the Council. They are doing this via the smart contracts used on the MRHB platform that are set to enforce the Shariah compliance and prohibit the use of any asset that is unlawful according to Shariah Law. The supervision of duly experienced and highly qualified in-house Shariah advisors will ensure that the activities on the platform are Shariah-compliant.
Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it!
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