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SCxSC 2020: Are Cryptos Shariah Compliance?

SCxSC 2020: Are Cryptos Shariah Compliance?

The year 2020 has slowed down various businesses and programs due to the Covid-19 pandemic. However, it does not stop the Securities Commission Malaysia (SC) to proceed with its annual SCxSC Fintech Conference.

In its 7th installment, applying the ‘new normal’ and proving the capabilities of navigating through tough times, SCxSC 2020 held virtually.

There are great lineups scheduled with one of the topics is Crypto Conundrum in Islamic Finance. The moderator for the session Sharifatul Hanizah, the Executive Director of Islamic Capital Market in SC, together with three top panelists. They are Datuk Dr. Mohd Daud Bakar, the Chairman of the Shariah Advisory Council (SAC) at Bank Negara Malaysia (BNM) and SC, Sheikh Mohamed Elgari, a prominent Shariah Advisor, Dr. Ziyaad Mahomed, the Head of Islamic Social Finance at INCEIF, and Basheer Ahmad, the Senior Manager of Markets at Dubai Financial Services Authority.

The usage and acceptance of cryptocurrency are still low in many Islamic countries. However, it is here to stay.

Digital assets are Shariah-compliance assets.

In SC’s recent development about cryptocurrency, the SAC has given the green light for Muslims to invest in digital assets with the approved and registered Digital Assets Exchange (DAX) in Malaysia.

The Chairman of SAC, Datuk Dr. Mohd Daud Bakar said, the SAC resolutions published and shared in July this year. It outlined the digital assets from Shariah perspective.

Can it be considered as money?

Sheikh Mohamed Elgari believes that digital assets are the evolution of money. Since the early civilization, the usage history of money has been changing over time, and expect nothing less with cryptocurrencies.

As long as it fits the required criteria for money and following the comply with the Shariah guidelines, the Muslims are allowed to use it.

Can blockchain and digital assets improve Islamic social finance?

According to Dr. Ziyad Mahomed, there are too few use cases utilizing blockchain technology to improve Islamic social finance. For example, one of the challenges is the deficit in Zakat collection.

If the Zakat collection is done efficiently without deficit, in a few years, we can overcome the world hunger crisis.

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Even so, the blockchain and cryptocurrency technology is still everchanging with new developments. It gives more room to explore the technology usages for Islamic social finance.

Focusing the benefits

While it can be difficult for the non-tech or less-informed person to understand the background of the technology. 

The three panelists somewhat agreed that to understand it is non-primary. This should apply to how money is printed and managed by the banks.

The public should focus more on the benefits and how it can improve the way of life.

Do you still have doubts?

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