Swiss-based cryptocurrency firm X8 has been certified for Sharia compliance by Islamic scholars as it prepares to launch operations in the Middle East.
The Shariyah Review Bureau (SRB), an advisory enterprise regulated by Bahrain’s central bank, has certified X8 AG’s X8C stablecoin as a sharia-compliant digital currency.
Several fintech firms are integrating their technology into the field of Sharia-compliant finance, with regulators and financial exchanges in the Middle East region keen to attract new business and encourage innovation in the sector.
“The Gulf region is a really good place for financial technology companies, because they all want to become hubs for fintech.” She added that the firm would be setting up a new office this month, making it easier to perform their role. Luckily, the regulators have been incredibly welcoming for the fintech industry, giving them an easy opportunity to get involved,” X8 co-founder and current director Francesca Greco said.
Unlike other stablecoins singularly pegged to an asset or a fiat currency, the Ethereum-based X8C token is underwritten by a “basket” comprised of gold and eight currencies, namely the euro, the pound sterling, the Japanese yen, the Swiss franc, and the US, Australian, Canadian, and New Zealand dollars.
Regulators within the Middle East have been friendly towards digital assets; nonetheless, concerns about cryptos high price volatility have been raised. To protect consumers from suffering huge losses arising from the wild price fluctuations, the region encourages consumers to trade in stable coins- cryptos backed by real assets or state institutions like the Federal bank.
The scholars leverages on Quran’s teachings to license companies seeking to operate in the region. According to the teachings of Muhammad, transfer of ownership rights on a property is permissible and cryptocurrency dealings are considered to fall under this kind of operation. Although there is no consensus in the region, with some scholars looking at it as pure speculation, thus banning it.
The company also plans to launch a crypto-exchange that would include a Sharia-compliant component, and it has held discussions with local exchanges in Abu Dhabi, Dubai and Bahrain, Greco added.
The SRB certificate has several provisions, including Shariah guidelines on possession, purchase, selling, and exchange of cryptocurrencies, and the promise to trade digital coins.