The Gold-backed cryptocurrency is hoping to attract increased investment from Middle East and Asian backers by conforming to Sharia principles, and now has approval from influential advisors.
As cryptocurrencies are “products of financial engineering and objects of speculation,” they “sit uneasily with Islam”. This, at least, is the preface of a report from Reuters on the ICO of OneGram, which is issuing gold-backed crypto – where every one of its issued coins has a corresponding gram of gold deposited in a vault in order to better align with Muslim principles.
Under the motto “In Gold We Trust”, OneGram calls itself the “the first physically gold-backed and Shari’ah compliant cryptocurrency based on blockchain technology.”
Founded by Ibrahim Mohammed in 2017, the U.A.E.-based company ranked#13 in Forbes’ recent Top 20 Middle East Fintech start-ups for its efforts to convince Muslim investors that cryptocurrency is not necessarily incompatible with their faith – which bans interest, and promotes ‘real’ economic activity centred around physical assets as opposed to speculation (gharrar).
As sharia is not a codified form of law, giving it the features of adaptability and development as interpretations evolve and change, the decision as to whether or not a financial instrument conforms with it rests with disparate advisory bodies – be they independent or tied to specific countries. This, of course, can lead to a wide-ranging and often confusing clash of interpretations.
While no Nation-state authorities have ruled on cryptocurrency as yet, several independent groups and religious bodies have reached rulings on Bitcoin, or crypto in general – but the matter is complicated somewhat by the sheer proliferation of ICOs and coins, with sharia interpretations possible in each case. While many bodies have come down in favour of the crypto concept, some influential scholars and thinkers – including Egypt’s Grand Mufti, the country’s top Imam – have ruled them, or at least Bitcoin, contrary to Islamic principle.
As it moves towards placing its OneGram Coin on exchanges – hopefully towards the end of May – OneGram has now found approval for its ICO from one of the bodies that advises on conforming with Islamic principles, Al Maali Consulting Group. While Reuters posit that only about 20-30% of banking conforms fully to Sharia principles through the Middle East and Asia, the issue of religious permissibility could be important to larger Islamic funds or banks investing in cryptocurrency such as this.
“Gold was among the first forms of money in Islamic societies so this is appropriate,” Ibrahim Mohammed, told Reuters. “We are trying to prove rules and regulations from sharia are fully compatible with digital blockchain technology.”
You can read OneGram’s whitepaper here.