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Muslims Disproportionately Excluded From Cryptocurrency

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Aside from ‘get rich quick’ strategies or even technology that offers strong use-cases both in the corporate and consumer sector, cryptocurrency has already begun to make a name for itself in the charitable sector.

In April, Wikimedia, the non-profit foundation behind the popular online encyclopedia, Wikipedia, announced it had on boarded the Request protocol to easily accept donations in cryptocurrency; the Pineapple Fund, which had donated a total of $55m in BTC to a wide variety of charitable causes, shut down just two weeks ago.

But now, cryptocurrency might see increased use as a means of donation in the world of Islam.

SIMETRI Research

On Monday, the Masjid Ramadan, a Turkish mosque situated in East London, announced it would accept Zakat and Sadaqah received in Bitcoin or Ether.

Speaking at a press conference, the mosque’s chairman, Erkin Gurney said that the move would enable the mosque to recieve more donations.

“The mosque is not financially strong enough to support everyone”, he said. “We don’t want to upset anyone but crypto is another avenue, another currency, that will give people a platform to donate”.

During the Islamic month of Ramadan, when practicing Muslims fast during the daylight hours and may make a pilgrimage to the Holy City of Mecca, those except from the very poor are obliged to give 2.5% of their wealth to charity. The compulsory annual donation is known as Zakat, with bequests over the minimum known as Sadaqah.

With Ramadan having begun last week, the Mosque hopes it can raise £10,000 ($13,450) from cryptocurrency donations. The funds are expected to go towards essential repairs to the Mosque as well as assisting with funeral costs and shelter for those in need in the local area.

Gurmit Singh, whose company, Combo Innovation, provides advice and support for the mosque in accepting crypto donations argued that the value currently locked up in cryptocurrency was an opportunity to address the poverty that disproportionally affects Muslims.

“23% of the world’s population is Muslim, but 53% of the world’s poor are Muslim”, Singh said.

“With a total market cap of £290 bn [according to CoinGecko on May 21st] with bitcoin holding a market dominance of 36% or approx £104bn…1% of bitcoins [could be] held globally by Muslims; that could mean  £1.04bn of bitcoin could possibly be sitting in Muslim owned crypto wallets.”

“That is a potential £26 million in Zakat contributions sitting there idly when it could be used for so many worthy causes globally”, Singh said.


Obstacles for Islamic Cryptocurrency

The move is not unprecedented. Back in 2017, two Mosques, one based in the US state of New Hampshire and another in the Netherlands, also began accepting Zakat in cryptocurrency; the UK Muslim charity, Helping Households Under Great Stress (HHUGS) began accepting donations in crypto earlier this year.

However, unlike banking practices found in the Western world, Islamic finance is governed on principles that it is forbidden to accept money made from interest or from speculation. This puts it at odds with an asset-class which, with high levels of volatility, can quickly lead to money being made from sources forbidden in Islam.

After the press briefing, Crypto Briefing asked how this affected the mosque’s ability to accept donations in cryptocurrency

“Our plan is to liquidate any cryptocurrency donations we receive as soon as we get it so that the donations do not change in value”, said Singh. Donations will be promptly converted into sterling using the cryptocurrency exchange, LocalBitcoin UK.

That said, there is still uncertainty surrounding whether cryptocurrency is acceptable according to Sharia law.

Authoritative figures such as the Grand Mufti of Egypt have come out in favor of cryptocurrency bans because of its use among criminals as well as its regulatory ambiguity, whilst scholars in Qatar, Pakistan, and Indonesia have declared crypto to be halal, or permissible.

According to Islamic advisor to the Masjid Ramadan mosque, Zayd al Khair, who has spent time studying Islam in Egypt as well as in Saudi Arabia, differences of opinion are nothing new to Islam but he believes that cryptocurrency would become gradually more acceptable as it became a recognized storage of value.

He also argued that Islamic attitudes towards cryptocurrency are in a transition period:

“Things have changed over the past six months and more scholars are coming out to say it [cryptocurrency] is permissible now,” said al Khair. “Similar to tobacco, which became haram as the negative health effects of smoking became clear, so can the Islamic stance on cryptocurrency change.”

At present, the Masjid Ramadan mosque will only accept donations in Bitcoin or Ether but may look to expanding the number of acceptable coins in the future.

“We’ve started this ground-breaking campaign. If it’s successful, I am sure many more mosques and [Islamic] charities will embrace crypto-currencies too,”  al Khair said.

“Of course a new position could always be taken later”, he added.

 

DISCLOSURE

Authors at Crypto Briefing are invested in cryptocurrencies. The author of this post may be invested in digital assets mentioned here.

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