Speaking in the 5th International Conference on Islamic Finance (ICIF) on Doha, Qatar 09-10 October 2022, Dr Samir Alamad, Associate Director International Finance and Banking at Coventry University and Chief Adviser Islamic Banking and Finance at IIFS LTD addresses key industry questions.
In his speech in this global conference dedicated to address fintech and crypto in the context of the future of Islamic finance, Dr Samir provided a practical framework for assessing what would be acceptable from an Islamic finance and Sharia perspective as a fintech and crypto assets which includes cryptocurrencies.
By applying religious rules as a directive, he examines the concept of money and cryptocurrency within the theory of money and how it is enacted in the context of Islamic finance amid differences of opinions among its actors.
Dr Samir commented on fatwas issued by national fatwa authorities in few countries as lacking appropriate Sharia and academic analysis. He adds, while his position about this matter is neutral, the grounds for those fatwas were attributed to issues, such as fraud, tax evasion, money laundering, gharar (uncertainty), but not to the core Sharia ruling. He explained that this is something we expect to be the banning grounds from a central bank or a financial regulatory authority, rather than a fatwa authority. Dr Samir differentiates between assessing the permissibility or impermissibility of fintech and crypto assets on the basis of Sharia rulings in the Islamic jurisprudence and the Maslaha (Sharia public good). He criticizes basing the prohibition on the Maslaha only before considering Sharia ruling and the analysis about what is considered Maal (money) and then what could be acceptable as a currency drawing clear distinction between the two.
Dr Samir concludes that There are different types of crypto-assets and cryptocurrencies that we should assess in accordance with the criteria he set out from an Islamic finance perspective. While some cryptocurrencies can be argued that they meet the criteria to be viewed as money and be used a currency within its community as being permissible under Sharia, this cannot be argued for all of them. The maslaha al Shar’yyah and Shariah objectives are important judging criteria when assessing fintech, cryptocurrencies or crypto assets after assessing it on the ground of Islamic jurisprudence with a clear rationale. Something could be ruled as permissible under the Islamic jurisprudence, however its permissibility could be suspended under the Maslaha (Sharia public good) due to the potential harm it may cause to destabilising a national currency or monetary policy in a specific country(s) which is not prepared to deal with this new phenomenon. Therefore, Islamic legal opinions should not be influenced by politics or be politicised to serve a purpose out of its scope.
For any queries please contact Ihsan Islamic Finance Solutions LTD (IIFS) and Islamic finance and banking advisory company based in the UK.