Egypt lifts ban on cryptos following new Sharia-compliant technologies
Egypt has loosened its grip on cryptocurrencies.
A ban issued in January 2018 by the current Grand Mufti, Shawki Allam, has now been lifted, with the Central Bank of Egypt (CBE) regulating the allocation of licences for companies willing to trade and issue cryptocurrencies.
Such decision followed the expansion of a growing Sharia-compliant environment in the world of cryptos and blockchain-related technologies.
Many Muslim countries, indeed, base their financial institutions on the rules of Sharia, in what is commonly called ‘Islamic banking and finance’. The rules of Islamic baking are pretty clear: first and foremost every form of haram (harmful) activity is prohibited – such as charging interest rates, which are considered riba (usury).
Besides, according to the commercial laws of Sharia, every transaction must be linked to a physical asset. Due to their very nature, cryptos do not fall in such category.
However, a growing number of blockchain-based companies have found original and innovative ways to comply with Sharia laws, as linking every virtual transaction to a certain quantity of gold – as in the case of OneGram or HelloGold – or to other permitted physical assets – as HalalChain.
Last April, Bitcoin was declared halal (Sharia-compliant), with the pioneers of such breakthrough mainly based in the United Arab Emirates and Malaysia.
Egypt has been undecided until last week. At last, though, the government decided to exploit the new opportunities of blockchain and crypto technologies.
The Grand Mufti said that when he unwelcomed cryptocurrencies, it was a period when their anonymity could undermine the legal system with fraudulent activities as money laundering and tax evasion.
But the fintech scene of Egypt seems to be on a rise. It’s not possible, at this stage, not to see a potential in the implementation of virtual, Sharia-compliant, alternative currencies.
With this move, Egypt welcomed a financial openness many countries still have to consider.