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The world’s top Islamic finance scholars are scrutinising the validity of cryptocurrencies, as debate grows in the industry as to whether such fast emerging financial tools can be deemed sharia compliant.
The discussions are part of the annual sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) being held in Bahrain this week.
Financial technology developments mean scholars must revisit Islamic finance concepts and how they have evolved over time, Ebrahim bin Khalifa Al Khalifa, chairman of the AAOIFI board of trustees, said in his opening remarks at the conference. “The floor is open to tackle this recent breakthrough in the monetary sphere from a sharia perspective.”
The key question for scholars is whether cryptocurrencies fall under the so-called ‘ribawi’ category, which includes commodities like gold and silver. Ribawi items must be exchanged in equal measure and with immediate transfer of possession.
AAOIFI primarily issues accounting and sharia standards for Islamic finance institutions, but there is no current indication it would issue guidance on cryptocurrencies, according to reports. Scholar deliberations, however, could clarify what types are religiously acceptable and influence future product development.