Cryptocurrencies have surged in popularity. Today they have a total valuation of $1.2 trillion globally, according to CoinMarketCap. As digital assets go mainstream, Muslims have entered the market. Like other investors, they face volatility and wild price swings, but many also have added religious concerns. Islam sets strict guidelines on finance, the most well-known perhaps being a prohibition on interest. A $3 trillion finance industry that relies on the rulings of Sharia scholars and religious experts exists to serve practicing Muslims. While traditional banking has functioned in the system for centuries, cryptocurrency is a relatively new arrival.
In 2021, Pakistan ranked third globally in the adoption of cryptocurrencies. India, with a 15 percent Muslim population was second, and Nigeria, where half the country follows Islam, ranked sixth. a small but ambitious number of startups have sensed an opportunity, and they are going beyond merely screening tokens. One such firm is Marhaba De-Fi, which launched in December 2021 and bills itself as the world’s first halal decentralized financial ecosystem. Decentralized finance is a blockchain-based alternative to the traditional financial system that allows users to borrow, lend and trade cryptocurrency without an intermediary like a bank or broker. Investors have the potential to generate returns on their digital assets outside of appreciation, but also risk losses. This summer Marhaba will launch a halal staking mechanism. “Staking” is a process in which participants lock up their coins to support a currency’s blockchain and verify transactions. The move boosts the value of the currency and in exchange, participants are paid with new coins. Just as many of these new ventures are taking off, more headwinds could be on the way. Digital assets have plummeted in recent weeks. Bitcoin is down about 50 percent from its record highs, while roughly $1 trillion has been wiped out from cryptocurrencies’ value year-to-date.