Blockchain Firm Algorand Announces Sharia Certification for Islamic Finance

The Algorand Foundation announced that its blockchain platform is now certified for Sharia-compliant financing.

According to a press release on Oct. 21, Islamic institutions can now start using the proof-of-stake Algorand blockchain for economic exchange, stating:

“Islamic enterprises will now be able to realise new business opportunities on a platform that is congruent to their finance guidelines.”

Although Algorand obtained the certification for Sharia financing, each decentralized application built on Algorand will need to be evaluated and vetted individually for compliance. The Algorand Foundation recognizes the importance of Islamic financial markets to the global economy and therefore enlisted Bahrain’s Shariyah Review Bureau (SRB) as an independent advisor to ensure the network remains compliant. 

Fintech and blockchain firms are seeking Sharia compliance

Cointelegraph reported in August that Dubai-based fintech company Wethaq partnered with enterprise software firm R3 to create a platform built on R3’s enterprise blockchain platform Corda. The platform will issue and trade Sukuk securities — Islamic financial certificates that are similar to bonds. 

Distributed ledger protocol Stellar acquired a Sharia compliance certificate in the money transfer and asset tokenization field in July of last year. The SRB examined the capabilities and applications of Stellar and released guidance that allows Islamic financial institutions to use Stellar technology.

In November 2018, the Dubai-based Al Hilal Bank conducted its first Sukuk transaction using blockchain technology. The bank used distributed ledger technology “to sell and settle in the secondary market a small portion of its $500 million five-year Sukuk.