Algorand Blockchain Network Now Certified for Sharia Compliant Financing
The Algorand Foundation announced that its blockchain network has now been certified as Sharia-compliant for the inclusion of Islamic financial markets.
In a press release on Oct. 21, it was revealed that Algorand has achieved the certification under the supervision of the Shariya Review Bureau (SRB) who ensured the compliance with Sharia-critical aspects required of Islamic financing.
Steve Kokinos, CEO of Algorand commented on the development and his firm's commitment to inclusion, “With the rapid growth of the Islamic financial markets, I am excited that forward-thinking Islamic enterprises will now be able to realize new business opportunities on a platform that is congruent to their finance guidelines."
While the Sharia certification allows Algorand’s network to be leveraged by Islamic institutions for economic exchange, each decentralized application that is built will need to be evaluated individually for compliance with Islamic Law. Algorand will continue to enlist the services of the SRB to ensure the network remains compliant as new innovations are integrated into the platform.
Why Islamic Finance?
According to an article from Global Finance, Islamic Finance is a rapidly growing financial sector that integrates economics with the ethics and morality of the Islamic faith. For Muslims, Islamic finance has some very clear benefits. Because Islamic law holds that making money from money is wrong, sharia-compliant institutions tend to refrain from engaging in speculation. They traditionally avoid derivative instruments such as futures or options and prefer to have assets grounded in the real economy.
The ban of usury forbids Islamic institutions from charging interest on loans, known as riba. Rest assured, Islamic banks still make money from their loans but instead of just profiting off their clients' loan interest repayments, they will buy the assets and then re-sell them to their clients at an agreed slightly elevated price. This system means banks share the risk of their clients and profit on the contracts upon the successful completion of a contract.
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