DeFi platform Marhaba taps $3 trillion in Islamic finance sector with Halal-compliant NFTs
Marhaba DeFi Network (MRHB), an ethical Muslim-focused decentralized finance platform, has started providing non-fungible token (NFT) minting for what it calls the “world’s first halal compliance certifications.”
Hosted on the MRHB’s SouqNFT marketplace, the certifications could help bring transparency to companies and businesses, allowing them to show “definitive proof to their customers that their business practices are halal and acceptable to Muslims.”
“The trustless nature of NFT-based halal compliance certifications addresses a pressing need in the halal economy sector, where certificate forgery is common or difficult to validate,” said MRHB Founder and CEO Naquib Mohammad at BeInCrypto.
“NFTs are unique and not replaceable or interchangeable – this makes them a perfect technology for immutable certificates,” he added. He said the “first” entity to receive such certification of halal compliance is Cache Gold, a crypto gold platform from Singapore.
How does the certification process work?
As part of the system, companies wishing to comply with Shariah can now do so by getting certified by Shariah Experts Ltd., a London-based halal consultancy specializing in Web3 projects.
The company relies on the SouqNFT platform to issue and mint halal certificates on the blockchain, in a new use case for NFTs. Until now, halal certification was mostly done on paper or digitally, but this tended to expose users to “slow tampering and verification processes”.
Mohammed said every project within the MRHB ecosystem is screened for modesty and morality in accordance with halal, an Arabic concept describing what is permitted under Islamic law.
While SouqNFT also hosts non-fungible tokens that are halal but uncertified, its screening process generally checks for issues such as nudity, hate speech, racism, and authenticity for all NFTs, whether under the form of an image, a video or a sound, he explained.
“The blockchain’s complete transparency also means that anyone can easily cross-check a certificate with Shariah Expert’s public key to verify beyond a shadow of a doubt that it was that specific Shariah consulting firm that struck. the NFT and issued the certificate. By default, NFTs embed proof of ownership,” Mohammed said.
$2.7 trillion Islamic finance industry frowns on bitcoin
Shariah compliance is an important customer need and regulatory requirement in several Muslim markets. But the legitimacy of crypto assets such as bitcoin (BTC) remains a subject of great controversy.
Prominent Islamic leaders have tagged bitcoin as “haram” – meaning it is prohibited by Sharia on the grounds that the asset can be used for illegal activities such as money laundering, gambling and fraud, which are prohibited by the Quran .
There are also concerns about the lack of central authority and how digital currencies rob governments and central banks of their power over national monetary systems. In November, a prominent Islamic scholar from Indonesia, Asrorun Niam Sholeh, issued a religious statement, or fatwa, Attention supporters against crypto investing saying “it’s like gambling”.
Against this backdrop, Naquib Mohammed’s MRHB is entering the NFT space, and elsewhere in DeFi, in hopes of enticing conservative Muslim worshipers with its alternative halal financial products. The network aims to operate an Islamic finance industry estimated at over $2.7 trillion and serving one billion people, according to the British Muslim financial platform Qardus. Explaining, Mohammed said:
“MRHB functions effectively as a gateway for Islamic liquidity to flow into the crypto market. When Islamic liquidity flows in, interest in NFTs will also increase. We are creating a new market.
Sharia Compliance Threatens DeFi’s Autonomy?
Although the MRHB considers itself to be decentralized, its processes for controlling the application of halal compliance can amount to access control. This is anathema to the philosophy of DeFi, which thrives on autonomy, challenging the status quo. But Muhammad said:
“We definitely control certain aspects, such as listing and operations, under a select set of protocols, but once audited by the Shariah team, the decentralized aspects are not compromised.”
He explained that besides religious considerations, the basics of halal-compliant NFTs are acceptable even to those who do not follow Islam, as the standard expectations align with what is generally considered ethical web practices.
The MRHB says it is building an ecosystem of DeFi products and services “specifically designed for ethically conscious people such as Muslims.” In 2021, the outfit raised $5.5 million in an initial dex offering (IDO). Since then, he launched a halal crypto wallet called Sahal and partnered with 14 companies, including Polygon.
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