Diamond Standard Co., the sole producer of regulator-approved natural diamond commodities, has achieved a groundbreaking milestone by securing a historic Fatwa from Sheikh Dr. Mohamed Ali Elgari, a preeminent authority in Islamic finance. Announced on May 29th in Dubai, this endorsement validates the use of diamond commodities as a Shariah-compliant solution for Islamic financial applications, particularly for commodity Murabaha. This development is poised to reshape the $5 trillion global Islamic finance industry, blending ethical principles with cutting-edge technology.
Sheikh Dr. Elgari’s unparalleled expertise, cultivated through his roles at institutions like the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and various major Islamic banks, lends significant weight to this endorsement. His Fatwa addresses a critical challenge in Islamic finance: the prohibition of interest-based lending, which necessitates asset-backed transactions. Historically, commodity Murabaha, where a bank buys an asset and sells it to a client at a markup, has relied on metals like nickel or copper. However, the introduction of AAOIFI Standard 62 now mandates physical delivery of the commodity’s title, rendering many traditional paper-based practices non-compliant and making gold, silver, and food commodities unsuitable for Murabaha.
Diamond Standard’s innovative solution offers a game-changer: physical diamond commodities in the form of coins and bars. Each is an optimized set of diamonds sealed with a wireless computer chip, ensuring transparency and uniformity. These commodities are fully deliverable, fungible, and tradeable on spot exchanges with daily prices reported by Bloomberg. Crucially, the embedded chip enables instant title transfer and remote audits via a public blockchain, guaranteeing compliance with Shariah requirements and eliminating uncertainty.
Beyond compliance, diamond commodities offer substantial practical advantages. Their custody and delivery costs are up to 97% lower than those for metals like copper, providing a cost-effective and practical alternative for Islamic banks. This innovation has also received approval for settling futures and options regulated by the U.S. Commodity Futures Trading Commission (CFTC), with internal audits conducted by Deloitte, further cementing its credibility.
The Fatwa’s issuance followed a direct request from a consortium of Islamic banks seeking a Shariah-compliant Murabaha solution with audited physical custody in a Muslim-majority country. In response, Diamond Standard has established a commodity holding and trading company in the GCC region, backed by $280 million in capital commitments. This entity will supply diamond commodities to Islamic financial institutions and trading platforms, fostering a robust market for Murabaha transactions. It will also introduce a listed fund for equity and Sukuk investors, allowing them to invest in diamonds as a hard asset with potential for value appreciation. This initiative is expected to generate over 200 jobs in the GCC, bolstering regional manufacturing, exports, and trade.
To further enhance accessibility, Diamond Standard has partnered with the Dubai Multi Commodities Centre (DMCC) to provide audited, tax-free custody for its commodities. This strategic move eliminates tariffs that would apply to diamonds entering markets like the US, benefiting Islamic banks and investors. The DMCC, a leading global trade hub, already boasts the Shariah-compliant Tradeflow platform, which aligns with AAOIFI standards. This collaboration underscores Dubai’s growing prominence as a global Islamic finance hub, with the UAE’s Islamic finance industry valued at over $285 billion in Q1 2025.
Cormac Kinney, founder and CEO of Diamond Standard, highlighted the transformative potential: “We set out to unlock $1.2 trillion of natural diamonds as an investment asset, but their dense value, paired with modern technology, has made them ideal for Islamic finance. We are honored to strengthen Islamic values through this innovation.”
By fusing blockchain technology with the intrinsic value of diamonds, Diamond Standard is pioneering a new asset class that aligns centuries-old Shariah principles with 21st-century financial innovation. This breakthrough arrives amid rapid growth for Islamic finance in the UAE and GCC. The UAE’s new strategy aims to double Islamic banking assets to Dh2.56 trillion by 2031 and boost Sukuk issuances to over Dh660 billion, reinforcing the region’s leadership in the $2.44 trillion global Islamic finance industry. Diamond Standard’s Fatwa-approved commodities position it at the forefront of this expansion, offering a scalable solution that enhances financial inclusion and efficiency.
The impact of this Fatwa extends beyond finance, promising to democratize access to a $1.2 trillion natural resource while fostering economic growth in the GCC. By addressing compliance challenges, reducing costs, and leveraging blockchain for transparency, Diamond Standard is not only redefining commodity Murabaha but also paving the way for a more inclusive and innovative Islamic finance ecosystem.
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