Gulf Countries Will Use Stellar to Facilitate Cross Border Payments
Blockchain project Stellar has become the first distributed ledger technology (DLT) to receive a formal Sharia certification.
According to the official press release on Tuesday, Stellar is the first cryptocurrency project that is compliant with the Islamic regulatory requirements.
Stellar is the first distributed ledger protocol to receive Sharia compliance certification in the money transfer and asset tokenization space.
Read more: https://t.co/FYiRmGxt6y
— Stellar (@StellarOrg) July 17, 2018
The Shariyah Review Bureau (SRB), a leading international Sharia advisory agency and a Central Bank of Bahrain licensee has reviewed the applications and properties of Stellar and has provided guidelines for making Sharia-compliant applications using the Stellar technology for Islamic financial institutions.
The certification grants Stellar the eligibility to enter the remittance market in the Gulf region. While talking to Reuters, Lisa Nestor, director of partnership at Stellar said:
“We have been looking to work with companies that facilitate remittances, including in the United Arab Emirates, Saudi Arabia, and Bahrain. It’s a huge market.”
Nestor further noted that in addition to the cross-border payments, Stellar’s technology could be used in other areas like “asset digitization, and the firm has an ongoing partnership with IBM to develop such blockchain applications”.
The official announcement reads:
“In partnership with SRB, this certification will help grow the Stellar ecosystem in regions where financial services require compliance with Islamic financing principles. For example, Islamic financial institutions in the Gulf Collaboration Council (i.e. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) and parts of Southeast Asia (e.g. Indonesia and Malaysia) will now be able to integrate Stellar technology in their Sharia-compliant product and service offerings.”
“In the next few months, members of the Stellar Development Foundation will meet with global financial institutions and engage them on how to best utilize Stellar in their Sharia-compliant financial services and products. We’re excited to add even greater diversity and inclusion into the Stellar ecosystem.”
Stellar is currently the sixth biggest blockchain platform and its native currency Lumens XLM has gained over 34% since the announcement, currently trading at $0.31.
Speaking to Reuters, Mansoor Ahmed, the Islamic advisory firm’s assistant general manager, talked about their decision to extend the certification to Stellar. He said:
“For the blockchain technology there was no issue, the main thing we needed to consider was the use of the underlying cryptocurrency.”
Several Islamic states have been debating on cryptocurrencies for long, especially regarding the price volatility of the asset class and whether it is legal to be used under the Sharia law or not. Stellar’s adoption is likely to set a precedent for the acceptance of other blockchain projects in the future.