For believing Muslims additional regulations apply to financial transactions. These are dictated by the Sharia, the Islamic law. So far there is no general judgement as to whether crypto currencies meet the requirements of Sharia law. In order to promote the adaptation of the Ethereum platform in the Islamic world, the Ethereum Foundation has now had its creation tested.

May believing Muslims use the Ethereum platform? Islamic legal scholars from Amanie Advisors, an Islamic financial consultancy, have investigated this question in cooperation with the Ethereum Foundation.

The result should be gratifying for Muslim crypto enthusiasts: The scholars classified both the Ethereum platform and the associated crypto currency Ether as “Sharia-compliant”. Amanie Advisors summarized the results of their research in a Shariah whitepaper, which can be downloaded here. Accordingly, the positive rating follows:

To be Sharia-compliant means that ether can be legally traded and exchanged by the Muslim community. It is permissible for a Muslim to buy, sell or hold ether in order to participate in the Ethereum Blockhain and take full advantage of the technology.

The purpose of the investigation was to remove any uncertainties in order to stimulate interest in the Ethereum platform in the Islamic world. The head of the initiative is Virgil Griffith, responsible for special projects at Ethereum. He established contact with Amanie Advisors. The legal scholars then set out to highlight the “Sharia parameters” of Ethereum and Ether.

Ether is not considered a currency


In the Shariah White Paper, the authors first discuss the question of whether ether should be classified as a currency from an Islamic perspective. The scholars deny such an assessment, ether is instead defined by them as a valuable commodity. For they recognize the primary function of ether as a utliity token for the Ehtereum platform.

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Ether therefore primarily serves as an incentive for Miner to confirm transactions. As such, it has value only within a limited ecosystem. The use of ether as a value store and universally valid medium of exchange, on the other hand, is only of marginal importance from the perspective of the experts.

The scholars then examine whether ether meets the requirements of Sharia law for goods. Here the principle applies: What does not include anything forbidden is permitted. Following this maxim they come to the conclusion that the exchange of ether neither includes interest nor is characterized by an inevitable uncertainty. After all, trading in ether cannot be compared to gambling. Thus, from an Islamic perspective, there is no reason why ether should be considered forbidden.

Also the Ethereum Blockchain is Sharia-compliant


Amanie Advisors also assessed the other components of the Ethereum ecosystem. They rated both the platform and the mining of ether as permitted. They also saw no fundamental objections to Smart Contracts and dApps. Here, however, the concrete content of the contracts and applications must be examined on a case-by-case basis.

Ethereum, by the way, is not the first crypto project to have undergone Sharia testing. The crypto currency Stellar already received a Sharia certificate in 2018.

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