Source: iStock/Clerkenwell

A start-up company from Dubai founded last year, OneGram, is issuing a gold-backed cryptocurrency as part of efforts to convince Muslims that investing in cryptocurrencies complies with their faith. Since it is an object of speculation, crypto could be haraam - forbidden by Islam.

In Sharia law, which, for example, bans interest payments, the emphasis is placed upon real economic activity based on physical assets. Pure monetary speculation is frowned upon, if not outright forbidden. Debate among Islamic scholars over whether cryptocurrencies are religiously permissible are raging, while companies are seeking to sway the debate by launching instruments based on physical assets and certified as valid by Islamic advisors, Reuters reports.

This is the modus operandi of OneGram, which is backed by at least a gram of physical gold stored in a vault, to limit speculation and draw Muslims into trading. Ibrahim Mohammed, the Briton who founded the firm, said, “We are trying to prove rules and regulations from Sharia are fully compatible with digital blockchain technology.”

Around 60% of tokens still remain to be sold, but OneGram hopes to issue them all before listing them on exchanges around end-May. They obtained a ruling that its cryptocurrency conforms with Islamic principles from Dubai-based Al Maali Consulting.

They are not the first ones looking to cater to this audience: HelloGold is a Malaysian startup, also gold-backed, that launched an Initial Coin Offering in October, receiving approval from Islamic scholars at Kuala Lumpur-based Amanie Advisors.

Experts warn that Sharia law concerning finance is an extremely complex topic and not to be taken lightly, but a step towards acceptance has been made: a certain degree of consensus has emerged globally that cryptocurrencies were a form of wealth, or maal. But until cryptocurrencies are deemed currencies in truth, Islamic tax payments called zakat and inheritances still face problems with it.