Marhaba DeFi Network (MRHB), a Muslim-focused “ethical” decentralized finance platform, has introduced what it is calling the “world’s first” certification for non-fungible tokens (NFTs) that are compliant with Shariah law.
Under the system, minted NFTs are submitted to a Shariah governance board, which reviews the artwork for modesty and morality, in conformity with halal, an Arabic concept describing that which is permissible under Islamic law.
Speaking to BeInCrypto, MRHB founder and CEO Naquib Mohammed, said the NFTs, whether in the form of an image, video, or audio, will be checked against issues such as nudity, hate speech, racism, and authenticity.
Once completed, a certificate is then issued on the blockchain and minted by London-based Shariah Experts Ltd., a halal advisory firm specializing in Web3 projects. He said the “first” entity to receive such certification is Cache Gold, a gold crypto platform from Singapore.
“The trustless nature of NFT-based halal compliance certifications fills a pressing need in the halal economy sector, where certificate forgeries are common or difficult to validate, especially in the halal food industry,” said Mohammed.
“NFTs are unique and neither replaceable nor interchangeable — this makes them a perfect technology for immutable certificates,” he added. The halal non-fungible tokens are hosted on MRHB’s marketplace SouqNFT.
$2.7 trillion-worth Islamic finance sector frowns upon 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 labeled bitcoin as “haram” – meaning that it is prohibited under Shariah law on the basis that the asset may be used for illegal activities like money laundering, gambling, and fraud, which are forbidden by the Quran.
There is also some concern over a lack of central authority and how that digital currencies strip governments and central banks of their power over national monetary systems. In Nov, one leading Islamic scholar from Indonesia, Asrorun Niam Sholeh, issued a religious declaration, or fatwa, warning followers against crypto investing saying “it’s like a gambling bet.”
Against this background, Naquib Mohammed’s MRHB DeFi Network is stepping into the NFT space, hoping to lure the conservative Muslim faithful with its halal-compliant non-fungible tokens. The network is targeting to tap an Islamic finance sector thought to be worth more than $2.7 trillion, and serving one billion people, according to UK Muslim financial platform Qardus. Explaining, Mohammed stated:
“MRHB is effectively working as a gateway for Islamic liquidity to flow into the crypto market. When there is Islamic liquidity flowing in, then there will be rising interest in NFTs as well. We are creating a new market.”
He said the certifications could help companies bring transparency and audibility to their work, allowing them to show “definitive proof to their customers that their business practices are halal and acceptable for Muslims.”
Does Shariah compliance threaten DeFi autonomy?
While MRHB considers itself decentralized, its Shariah compliance enforcement governance board may amount to gatekeeping. This is anathema to the ethos of DeFi, which thrives on autonomy, challenging the status quo. But Mohammed averred:
“We definitely control certain aspects, such as the listing and operations, within 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 the halal-compliant NFTs are acceptable even for those who do not follow Islam because the standard expectations tally with what is generally considered ethical web practices.
MRHB says that it is building an ecosystem of DeFi products and services “specifically made for ethics-conscious people such as Muslims.” In 2021, the outfit raised $5.5 million in an initial dex offering (IDO). Since then, it has launched a crypto halal wallet called Sahal and partnered with 14 companies, including Polygon.
Originally published on https://beincrypto.com