According to a report by IT World, the Malaysian government has inked a Memorandum of Understanding with South Korean firm IncuBlock to develop blockchain technology that satisfies Sharia criteria. The partnership will result in the exchange of blockchain information and technical expertise in order to create a blockchain platform and distributed applications (Dapp) that would be permitted under the Islamic law.
The partnership comes through Malaysia’s Malay Consultative Council (MPM) advisory committee and its international partner, Global Cornerstone Group. MPM’s Dato Hassan Binhmad said, “We hope this cooperation will lead to the development of block-chain technology that will be led by Malaysia and be used throughout the Islamic community.”
Sharia, the Islamic Canonical Law, is based on the Quran and prohibits a number of activities—for example, investments in companies that are not approved by Islamic teachings, such as alcohol. Also according to Sharia, cryptocurrency does not meet the definition of money according to Islam because it is not backed by an intrinsic commodity.
A FinTech company in Indonesia released a report this past April asserting that cryptocurrency could be “generally permissible” under Sharia law based on its wide reach and reliance on the blockchain, which provides verification of every coin transacted. However, the same report added that initial coin offerings (ICOs), especially those that promote fixed returns.
IncuBlock CEO Kwon Won-seon touted the company’s experience in blockchain technology as the main reason for the deal, stating that the knowledge will help the company create a viable solution. “I will make a great effort to utilize the know-how of the blockchain we have accumulated over the years to develop the Islamic blockchain platform practically,” he said.
In May, TE-FOOD, a company that provides blockchain-based food tracking, launched a project with UK-based Halal Trail that tracks livestock and fresh produce from the farm to the end consumer through a halal, or permissible, food chain. Certain mechanisms are already in place to ensure sharia compliance in food preparation; however, the use of the blockchain for tracking makes the practice more comprehensive and gives Muslims a stronger guarantee that the food is prepared in accordance with Sharia law.
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