Blockchain Protocol Stellar Obtains Bahrain’s Sharia Certificationbr>
Blockchain payments platform Stellar has received a sharia-compliant certification for its distributed ledger protocol from Bahrain’s Shariyah Review Bureau (SRB).
Founded in 2014, Stellar is an open-source protocol for exchanging money using blockchain technology. At launch, Stellar was based on Ripple. After systemic problems with the existing consensus algorithm were discovered, Stellar created an updated version of the protocol with a new consensus algorithm, which allows for decentralized control, flexible trust, low latency, and asymptotic security.
Stellar claims that it is the first distributed ledger protocol to receive Sharia compliance certification in the money transfer and asset tokenization space. The certification also extends to applications and usages of Stellar’s native currency called Lumens (XLM), the seventh largest cryptocurrency with a market capitalization of $5.1 billion.
“Based on provided information, SRB conducted its review on the Network’s guides, concepts and related material and did not find any provisions that are non-congruent to the principles of Sharia,” the SRB said. “However, the users of the Network seeking to attain Sharia compliance should take note that merely following the attached guidelines does not automatically ensure compliance to Sharia.”
The SRB certification will enable Stellar to forge partnerships with Islamic financial institutions throughout the Middle East and Southeast Asia.
“This certification will help grow the Stellar ecosystem in regions where financial services require compliance with Islamic financing principles,” Stellar said. “For example, Islamic financial institutions in the Gulf Cooperation Council (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) and parts of Southeast Asia (e.g. Indonesia and Malaysia) will now be able to integrate Stellar technology in their Sharia-compliant product and service offerings. This is a big advancement for the Stellar network given that these regions are endpoints of popular foreign worker remittance corridors.”
While Stellar calls itself “the first” Sharia approved distributed ledger protocol in the area of money transfers, its native crryptocurrency Lumen is not the first sharia-compliant token. In February of this year, Malaysia-based FinTech firm HelloGold received the same certification for its gold-backed cryptocurrency GOLDX from Amanie Advisors of Malaysia, a sharia advisory company specializing in Islamic financial institutions.