ABU DHABI — An Emirati financial services firm, ADAB Solutions, has announced plans to launch the world’s first Shari`ah-compliant cryptocurrency exchange, Albawaba reported on August 27.
“We’ll launch this platform because in the meantime no one can guarantee that the coins and projects listed on conventional cryptocurrency exchanges comply with the norms of Islam,” ADAB website’s official statement read.
The platform, called the First Islamic Crypto Exchange (FICE), is primarily aimed at all the 1.8 billion Muslims all over the globe. However, the firm will be operating globally with services available to all users interested in digital Islamic finance.
In order to offer crypto-related services that are permissible in Islam, ADAB Solutions won’t be involved in digital currency projects related to gambling, betting, usury, and other “Un-Islamic immoral services.”
Additionally, FICE won’t be associated with any business involved with the production of alcoholic beverages and tobacco products.
The exchange will support the cryptocurrency trading pairs of Bitcoin (BTC) and Ethereum Classic (ETC), as well as other cryptocurrencies approved by ADAB’s Advisory Board of Islamic Finances.
By adhering to the high moral requirements set forth by the Shari`ah community, the company will utilize the in-house Shariah Advisory Board (SAB) to ensure that the Islamic financial system is included in the global cryptocurrency market.
SAB is the independent body represented by internationally recognized Shari`ah experts, which will provide inputs on Shari`ah matters in order for the FICE to comply with Shari`ah principles at all times.
The Islamic exchange is expected to result in a “monthly turnover of $4.4 billion” during the first 18 months of its operations.
ADAB Solutions will also be introducing its own crypto token called ADAB and advertised as “the only cryptocurrency, which can be used to pay for commission and services within the project”. Its initial coin offering (ICO) is set to launch in early September.
How Does It Work?
A cryptocurrency exchange or digital currency exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money, or different digital currencies.
They can be market makers that take the bid-ask spreads as transaction commissions for their services or charge fees as a matching platform. DCEs may be brick-and-mortar businesses, exchanging traditional payment methods and digital currencies, or strictly online businesses, exchanging electronically transferred money and digital currencies.
They may accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies.
In one type of system, digital currency providers (DCP), are businesses that keep and administer accounts for their customers, but generally don’t issue digital currency to those customers directly. Customers buy or sell digital currency from DCEs, who transfer the digital currency into or out of the customer’s DCP account.
Cryptocurrencies such as Bitcoin and Ethereum enjoyed a bumper year in 2017 as mainstream investors entered the market. But, they saw a drop in value earlier this year because of concerns over a potential regulatory crackdown.
Islamic scholars have pondered over the permissibility of cryptocurrencies, wary of price volatility and the types of assets behind digital tokens.
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Islamic finance emphasizes real economic activity based on physical assets, shunning interest payments and outright monetary speculation.
Cryptocurrencies have drawn conflicting rulings from scholars.
In January this year, Egypt’s Grand Mufti issued a fatwa banning Bitcoins trading.
In December 2017, Saudi scholar Assim Al-Hakeem ruled that digital currencies are banned under Islamic law because they are “ambiguous.”
In November, Turkey’s highest religious authority – the Directorate of Religious Affairs, also known as the Diyanet – declared that buying and selling of digital currencies un-Islamic, warning its citizens against buying the world’s most popular cryptocurrency.
UK-based Muslim scholar Sheikh Abu Eesa maintains that cryptocurrencies are Halal.