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Islamic Finance Expert: ‘Halal Coin’ a Matter of Time and Awareness

Skepticism to crypto in Islamic countries is not a pure rejection, but a result of uncertainty, according to Malaysia’s Islamic finance expert.

The issue of Shariah acceptability of crypto is a matter of time and raising awareness, according to Malaysia’s Islamic finance expert.

Skepticism of crypto stems from uncertainty

Suhaida Mahpot, CEO of major Shariah advisory firm Amanie Advisors, suggested that the existing skepticism to crypto in Islamic countries is not a pure rejection, but rather a consequence of uncertainty, Islamic economy-focused publication Salaam Gateway reports Aug. 2.

Mahpot, an advisory veteran at Amanie with 11 years of expertise in sharia-compliant financing, compared the existing situation with cryptocurrencies with Malaysia’s controversial types of investment known as Amanah Saham Bumiputera (ASB) and Amanah Saham Nasional (ASN).

Comparing crypto with Malay ASB and ASN that were eventually made permissible

Mahpot states that understanding and perception of ASB has transformed over the years since its inception in 1990, and it was decided to consider it as “harus” in 2012, which means that it is neither prohibited nor encouraged by the teachings of the faith. 

Previously, there were two major stances towards ASB, Mahpot noted, with one of them suggesting that ASB was harus, and another ultimately rejecting it as haram.

The financial expert emphasized that ASB and ASN investments were finally declared permissible for Muslims by the Selangor Fatwa Committee, the same regulatory authority that previously prohibited them, citing the existence of riba transactions, which are considered usury.

“The same goes for digital currencies,” Mahpot argues, stressing that financial institutions and scholars need more education about cryptocurrencies and their benefits. She said: 

“We need to educate institutions more about how digital currencies can be accepted, and how the transparency from using cryptocurrency would benefit the wider society. Perhaps, this mindset will change over time.”

In early 2019, Cointelegraph reported that the United Arab Emirates and Saudi Arabia partnered to collaborate on the creation of a cryptocurrency.

In 2018, The ADAB Solutions project, based in the United Arab Emirates, announced that it plans to launch the First Islamic Crypto Exchange, which it claims will be operating “according to the principles of Shariah law.”

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Bittrex Launches Crypto Platform for Middle East Following New Partnership

Bittrex has partnered with crypto exchange and custodian provider Rain Management WLL to launch a regulated digital asset exchange for the Middle East and North Africa.

Bittrex cryptocurrency exchange is partnering with Bahrain-based crypto exchange and custodian provider Rain Management WLL to launch a digital asset trading platform for customers in the Middle East and North Africa (MENA).

The new platform will purportedly combine Rain’s staff and expertise in the MENA region with Bittrex’s technology and security infrastructure, according to an announcement on July 31. 

The platform will offer all the tokens that are currently available on Bittrex and Bittrex International. It will also offer four Bitcoin (BTC) trading pairs with local fiat currencies: the Bahraini dinar, the Kuwaiti dinar, the United Arab Emirates dirham and the Saudi riyal.

Local Regulation

According to the announcement, this new digital asset trading platform is the first to be fully licensed in MENA. Rain purportedly took part in the regulatory sandbox of Bahrain’s central bank, which launched in February 2019. 

As such, the firm operates under the so-named Crypto-Asset legal framework established by the Central Bank of Bahrain (CBB). Earlier today, Rain announced that it became the first cryptocurrency exchange in the Middle East to receive a regulatory license in the form of a Crypto-Asset Module license from the CBB. 

According to the Rain executive team, their goal is to bring international standards for crypto exchanges to the Middle East; for Bittrex, CEO Bill Shihara said he believes the partnership will help drive blockchain awareness and adoption.

At press time, Bittrex’s 24-hour reported trade volume is $31.9 million, up 35.55% on the day, according to data from CoinMarketCap.

Blockchain trade solutions in MENA

As previously reported by Cointelegraph, The Dubai Chamber of Commerce and Industry (DCCI) recently signed a memorandum of understanding with the International Chamber of Commerce and the blockchain startup Perlin. The MoU reportedly grants the DCCI exclusive rights to offer certain blockchain solutions in MENA that were developed by the Centre of Future Trade. The solutions are reportedly designed to reduce trading risks and provide supply chain transparency.

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Middle East Blockchain Development Primed to Lead the Global Industry

A large number of Gulf nations are embracing crypto with open arms as Ethereum explores partnership opportunities…

While we often get to hear about how cryptocurrency adoption is rapidly gaining ground in the West, a number of countries across the Middle East — such as Bahrain, the United Arab Emirates and Saudi Arabia — often tend to get overlooked, despite them having made tremendous strides when it comes to establishing regulatory frameworks that are geared toward the optimal utilization of this burgeoning asset class.

For example, a recent report by Asia Times has revealed that the UAE is one of the few nations in the world where the local government has placed special emphasis on promoting the use of crypto. In this regard, we can see that over the first quarter of 2019, UAE-based blockchain startups were able to raise a total of $210 million — thereby putting the Gulf nation at the apex of the world’s top-10 token sale list, even surpassing countries like the United States and the United Kingdom. What is most surprising is that just over a year ago, the UAE didn’t even make it on this list, thus proving that the onset of this recent crypto wave throughout the Middle East is somewhat of a recent phenomenon. 

In the same breath, it is also worth pointing out that the U.S. has now slid from the number one spot to sixth in the aforementioned crypto funding list, primarily because the nation’s lawmakers have adopted a somewhat confusing stance toward the digital asset industry as a whole. On the subject, Alex Buelau, the CEO of CoinSchedule, tends to agree with the notion that, due to a number of regulatory concerns, more and more companies are moving away from the U.S. in favor of more hospitable regions such as the Cayman Islands, Singapore, etc. 

Related: US a Crypto Exchange Scarecrow — What Needs to Change?

Not only that, Buelau also pointed out that, owing to the heavy-footed approach that countries such as China and India have adopted toward their local crypto markets, it appears as though the Middle East is now primed to lead the way for crypto adoption across Asia.

Lastly, according to reports, the Ethereum Foundation has recently been trying to make its way into the Gulf altcoin market by cooperating with financial experts. If successful, the organization could possibly help push partnerships with other established crypto firms in the coming future.

Notable developments worth highlighting

As many of our regular readers may be well aware of, Bahrain has made a lot of “under the radar,” crypto-friendly moves since the start of 2019 — with the nation’s central banking authority introducing an economic framework earlier this February that covers a host of rules related to the digital asset domain. On this recent development, Khalid Hamad, an executive director at the Central Bank of Bahrain (CBB), was quoted as saying:

“The CBBs introduction of the rules relating to crypto assets are in line with its goal to develop comprehensive rules for the fintech ecosystem supporting Bahrain’s position as a leading financial hub in the Middle East and North Africa”

Additionally, the Bahraini government was also involved in a joint crypto pilot venture along with Saudi Arabia and the UAE so as to help increase local awareness about blockchain technology as well as make cross-border payments between these countries more streamlined and hassle-free.

In a similar vein, Saudi Arabia is another nation that is also making use of blockchain technology to facilitate its international monetary transfers. For example, as per the announcement made by the Saudi British Bank (SABB) at the beginning of this year, the financial institution has partnered with California-based blockchain firm Ripple to launch an instant cross-border transfer service for its clients. Not only that, even the Saudi Arabian Monetary Authority (SAMA) is making use of a blockchain-based remittance system to facilitate transactions between various banks located within Saudi and the UAE.

Blockchain startups are targeting the Gulf elites

Another recent phenomenon that seems to be attracting attention is that established crypto entities are turning to the Middle East in order to acquire investments for their envisioned projects. For example, it recently came to light that the Ethereum Foundation was partnering with finance experts from the Persian Gulf in order to showcase the compatibility of their blockchain ecosystem with existing Islamic rules and regulations — sharia in particular.

This is probably the first time a big-name crypto organization has taken such a step to secure a large-scale investment from the region’s financial elites. On the subject, Ethereum Foundation’s head of special projects, Virgil Griffith, was quoted as saying:

“My job is to keep rolling dice. Probably nothing will happen. But there’s a hypothetical case where say, the Saudi sovereign wealth fund invests, like, a trillion dollars [in Ethereum projects], which would be a real boon. That would be really great.”

Not only that, there are also firms like Houston-based Data Gumbo that have been successful in creating a blockchain-as-a-service (BaaS) platform that is now being used by various offshore drilling firms situated in the Gulf region. Through its Series A equity funding round, Data Gumbo was able to raise a sizeable sum of $6 million from the Saudi Arabian national petroleum and natural gas company Saudi Aramco and leading Norewegian energy operator Equinor.

Also in a conversation with Cointelegraph, Matthew J. Martin, founder and CEO of Blossom Finance, said:

“The DIFC (Dubai International Financial Center) with its FinTech Hive is attracting many interesting ventures. Since DIFC companies are allowed 100% foreign ownership, it’s a solid option for many international teams looking for either their primary jurisdiction, or as a primary base to support operations regionally. The acquisition of Souq by Amazon was also great validation of the exit potential for investors, and this will likely increase the volume of venture capital pouring in. With the strong public sector support for blockchain projects we’re seeing in the UAE, it’s likely that more international teams will chose the DIFC to incorporate.”

It is worth pointing out that there is an overarching issue that the Gulf oil and gas industry is currently facing in the form of data inconsistency. This is because niche measurements related to the weight, speed, delivery time, volume, etc. of crude oil are interpreted differently by various operators, service providers and suppliers. This not only results in tangible work-related delays but also causes large-scale payment disputes among all of the member parties. 

Data Gumbo’s aforementioned platform minimizes such issues through the use of its BaaS network and smart contract technology, as it allows participating firms to obtain automated calculations on their invoice line items in real time. This enables important transactions to take place in a transparent manner. On the future potential of Data Gumbo’s BaaS-enabled platform, the company’s CEO, Andrew Bruce, noted:

“We enabled the first application of blockchain technology in the offshore drilling industry and will continue to break new ground with applications of BaaS to improve the bottom line of companies of all sizes. Blockchain will have a major impact on the oil and gas industry — and all global industries — and we will lead the charge in its broad adoption for sweeping operational improvements.”

More use cases

ADNOC: The Abu Dhabi National Oil Company (ADNOC), which is the UAE’s largest oil firm, recently collaborated with IBM to devise a novel blockchain-based automated system to keep a close eye on the financial values of each transaction taking place between its operating members. Additionally, the new platform has been built atop Hyperledger and makes use of the IBM’s native Cloud computing technology.

S&P Global Platts: The world-renowned energy and commodities information provider released a blog post recently announcing its decision to create a blockchain network that would allow market participants to provide the Fujairah Oil Industry Zone (FOIZ) with weekly inventory oil storage reports in a highly streamlined manner. FOIZ currently lays claim to the title of being the Middle East’s biggest commercial storage region for refined oil products.

NBAD: The National Bank of Abu Dhabi (NBAD) signed an agreement with Ripple back in 2017 in order to make use of the firm’s various blockchain offerings. The entire point of this exercise for NBAD was to streamline its monetary transactions and make international payments more accessible for its customers.

The potential roadblocks

Even though a number of novel blockchain projects have emerged from across the Middle East over the past year or so, various roadblocks that are preventing many Western firms from capitalizing on this untapped market segment still exist. For starters, the issue of shaira compliance is preventing various big-name companies from accessing the $3.4 trillion market simply because their operational protocols do not adhere to existing Islamic law. But it is not as if Gulf nations such as Saudi Arabia, Oman, the UAE are not interested in making use of blockchain tech, as just last year, the crown prince of Dubai has announced that the city was going to deploy a blockchain-based administration system by 2020 that will allow the local government to digitize the ID, tax and registry details of its citizens and will store the data on a blockchain network.

Related: From Qatar to Palestine: How Cryptocurrencies Are Regulated in the Middle East

With that being said, the Islamic banking sector at large is still holding on to its skeptical view of blockchain because most financial institutions operating within the region adhere to certain long-held traditions that are in direct conflict with the way Western banks work. For example, sharia law prohibits the lending of money using a fixed interest rate model (Riba) — a common practice used by many banks across the world. However, since crypto and blockchain makes use of a fractionalized ownership framework, it is possible to make money lending complaint with the Islamic way of doing things. 

In the same way, sharia also prohibits monetary transactions that are ambiguous in nature (i.e., deals that do not have defined legal boundaries). In this regard, smart contracts can be quite useful, as they clearly outline the terms and conditions of a particular exchange beforehand — thereby leaving no scope for future uncertainty.


As the global crypto economy continues to evolve, it seems as though established players such as the Ethereum Foundation and Ripple will continue to try to tap into the Gulf market because of the amazing monetary potential it offers. Cointelegraph recently got in touch with Atif Yaqub — an executive partner at UKP Assets — who is of the belief that, as we move into the future, the Middle East will start playing an ever-increasing role in shaping the digital currency landscape. According to Yaqub:

“As the Gulf nations move to diversify from their oil based economies, there is a huge drive in tech investment. There has been much interest in Blockchain and Crypto companies on the State and private level.”   

Similarly, while elaborating on the topic of how foreign firms are reaching out to Gulf states for ties, partnerships and money, he added:

“The Gulf offers untapped growth opportunities and entry to the wider region. Pursuing comprehensive Shariah certification for a network, like Ethereum has been doing, lifts many barriers to entry. This just expands the use cases and audience.”

Last but not least, with Facebook’s Libra coin all set to enter the altcoin market in the near future, it will be interesting to how crypto adoption spreads throughout the Middle East — especially considering that the social media juggernaut has a little over 265.4 million active users spread across the region.

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BitOasis Secures Preliminary Approval With UAE Financial Regulator

BitOasis has reportedly secured preliminary approval with the Financial Services Regulatory Authority of the Abu Dhabi Global Market.

United Arab Emirates-based cryptocurrency exchange BitOasis has reportedly secured preliminary approval with financial regulators, Bloomberg reported on May 13.

Founded in 2015, BitOasis claims to be the Middle East’s first digital currency wallet that uses multi-signature technology. The company previously announced that it was seeking to be fully licensed in the financial center Abu Dhabi Global Market (ADGM) before the end of this year. Ola Doudin, the founder and CEO of BitOasis said then that “we are hoping to be one of the first regulated exchanges to get that licence.”

Today, Bloomberg reported that BitOasis received preliminary approval in April from the Financial Services Regulatory Authority of ADGM to operate a crypto asset platform and wallets. To get a license, the exchange has to meet specific technical and operational requirements, which it expects to do in the second half of the year. Doudin reportedly said:

“This is a huge milestone. It gives us legitimacy as well, and we can now work with regulated financial entities. We’re able to work with other regulators in the region, such as Saudi Arabia. Overall, it will boost our growth in the region, legitimize the space and expand our reach in the market.”

The UAE has been demonstrating a proactive approach toward cryptocurrencies. Last September, Richard Teng, head of the Financial Services Regulatory Authority of the ADGM, claimed that loss and theft of cryptocurrency negatively impacts its image as an asset. “This space needs to be properly regulated, otherwise there is the risk of financial crime. Every time a coin gets stolen or lost, it affects the confidence in this asset class,” Teng said.

In February of this year, six commercial banks from Saudi Arabia and the UAE joined a digital currency project after the authorities of both the countries announced an agreement to cooperate on the creation of a cryptocurrency in January.

As Cointelegraph reported last October, the Dubai government also intends to use a digital currency backed by the state and pegged to the UAE’s fiat currency, the dirham, for utilities payments.

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Global Telecom Blockchain Consortium Unveils Working Group for Remittances

A global blockchain consortium of telecom carriers has announced that six further major international telecoms firms are joining its ranks, CT Japan reports today, July 6.

The consortium, dubbed ‘The Carrier Blockchain Study Group’ (CBSG) has also today unveiled the creation of a new blockchain working group that will focus on global remittance services.

Launched in September 2017, CBSG counts as its founding members Japanese telecoms conglomerate Softbank, Taiwan-based telecoms carrier Far EasTone, and two U.S.-based firms – telecoms-focused blockchain firm TBCASoft and telecoms firm Sprint.

Three further members have since joined, these being South Korean LG Uplus, UAE-based Etisalat Telecommunication Corporation and the state-owned South Korean KT Corporation..

In Asia, the latest leading telecom carriers to join are Malaysia-headquartered conglomerate Axiata, the Philippines’ leading telecoms provider PLDT, Indonesia-based Telin, and Vietnam’s largest cell network operator Viettel.

Zain, which provides cell and data services to almost 47 million consumers across the Middle East and Africa, and Turkey’s leading cell phone operator Turkcell have also joined.

The Director of Viettel International Business, Doan Dai Phong, gave some insight today into the ambitions of CBSG’s global cross-carrier blockchain ecosystem, saying the new services would cover “[cell phone] top-up, roaming wallet, secured clearing and settlement, personal authentication [and] IoT applications.”

Blockchain’s potential, which a Axiata representative argued is “by design […] extremely well suited” to streamlining global telecoms “across trusted, connected and distributed parties,” is being recognized by increasing numbers of major industry players.

In May, Cointelegraph reported on the successful live testing of a blockchain proof of concept (PoC) that would automate inter-carrier settlement of services across the telecoms industry, completed by two major telecoms firms from Hong Kong and the U.K.

Earlier this spring, Chinese telecoms giant Huawei revealed its latest Hyperledger-fuelled blockchain cloud service, and South Korean telecoms operator SK Telecom also announced two new blockchain tech platforms, one for digital asset management, and one to support the Initial Coin Offering (ICO) investment ecosystem.

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Major UAE Bank Implements Blockchain Tech To Prevent Check Fraud

The National Bank of Dubai (NBD), one of the largest banking groups in the Middle East by assets volume, has reportedly become the first bank in the region to successfully implement Blockchain technology in a check-issuance system to prevent fraud, local news outlet Arabian Business reported Saturday, April 21.

According to Arabian Business, the system works by means of printing a unique Quick Response (QR) code on each check and putting the records on Blockchain. The so-called “Cheque Chain” technology is designed to provide higher authenticity of the issued checks, as well as to the security standards across the UAE banking sector.

According to the NBD official statement, the bank has registered around one million checks on Cheque Chain in the first month of the pilot deployment. Following the successful test, NBD is looking for opportunities to roll out the Blockchain-powered banking technology across other UAE financial institutions.

Abdulla Qassem, NBD’s group chief operating officer noted the importance of the innovative technology deployment and highlighted that NBD bank is the first bank that offered such a service in the region.

“Emirates NBD is committed to exploring commercial uses for this innovative technology. After a successful pilot phase, we are pleased to roll out Cheque Chain to our customers nationwide, becoming the first bank in the region to offer this service.”

The UAE, along with major city Dubai, have taken a very positive stance on adopting Blockchain technology. Last week,  the Vice President and Prime Minister of the UAE and Ruler of Dubai launched the ‘UAE Blockchain Strategy 2021’, with the goal of becoming a world leader in deployment of the technology.

Meanwhile, Blockchain technology is becoming increasingly popular in the banking sector worldwide April 12 saw the announcement of Bank of America’s patent on a Blockchain-based storage system with automated data authentication, and on March 30, PKO Bank Polski’s partnership with a Blockchain company to provide DLT-based storage and verification system for bank documents.