Crypto firm X8Currency recently received Shari’a certification from Islamic scholars ahead of expansion into the Middle East.
The Swiss-based company calls itself “the ultimate safe haven for crypto investors,” and its X8X utility token was well-received in Europe. Now, X8Currency is keen to bring its services to an estimated 1.6 billion Muslims around the world.
The token uses artificial intelligence to ensure stability, and is backed by eight fiat currencies as well as gold.
Of course, not all Muslims follow Shari’a financial guidance. But in Saudi Arabia, Dubai and beyond, many deep-pocketed investors certainly do.
“[The certificate] provides reassurances that we are open to investors seeking to make investments in Shari’a compliant assets,” said X8 CEO Gregor Kozelj in the press release.
“It is very meaningful to receive the Shari’a compliance certificate.”
This is a notable achievement, considering the crypto industry is regarded with suspicion by most Islamic financial institutions.
But what does a halal cryptocurrency even mean?
Betting on a Non-Speculative Success
For regulatory body Shariyah Review Bureau (SRB), a non-speculative currency backed by inherently valuable resources fits the bill nicely.
X8Currency’s X8X utility token checks both these boxes. The token uses artificial intelligence to ensure stability, and is backed by eight fiat currencies as well as gold.
In partnership with ioNectar, Automatic Reserve Management (ARM) technology guarantees price stability and keeps token value constant.
According to X8Currency’s white paper, the AI is programmed to buy low and sell high. It evaluates hard-to-measure factors like price, volatility and decision-making costs — reducing speculation in the process.
“With the X8Currency token, any merchant can achieve his margins safely without dangerous currency speculation.”
An Unlikely Combination
There is serious debate within the Islamic banking community about whether cryptocurrencies are haram (forbidden) or halal (permitted) according to Shari’a.
To be clear, Shari’a is not a legal system although many of its precepts are instilled in Islamic Law. Not all Muslim-majority countries follow Islamic Law completely either, and some incorporate secular legal practices.
For the most part though, financial matters in Islamic countries are strongly governed by Shari’a.
This system says profits must be earned through work and lending money to someone in need isn’t considered work.
Shari’a also discourages the practice of making money through interest. Going against everything crypto is known for, gharar (high degrees of uncertainty) is not allowed either.
Moreover, when it comes to investing à la Shari’a, unethical causes and projects are to be avoided at all costs.
On the other end of the spectrum, cryptocurrency markets are notoriously volatile. It doesn’t help that many people associate cryptocurrency with the Silk Road and other unethical dealings.
Making It Work
To bridge this divide, X8 partnered with Shariyah Review Bureau (SRB). Their consultants reviewed X8’s non-speculative value proposition method, which passed with flying colours.
“We hope [this relationship] will drive new business opportunities for investors in the marketplace compatible to their faith-based values,” co-founder Francesca Greco explained in the press release.
SRB has 34 Shari’a scholars to review and supervise activity in banks, insurance companies and investment management services with offices in the Middle East. The group’s CEO was similarly enthusiastic.
“We are ready to deliver what’s required to support the future ambitions of X8 in the Islamic financial market.”
It is still too early to see how the market is responding to X8’s presence. But its halal certification will be a game changer for the crypto space, and we’re excited to see what happens.
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Liz is a Canadian journalist and writer for Bitcoin Australia. Connect with her on Twitter @Elizabeth_Utley, or on Linkedin as Elizabeth Utley.