Malaysia-based fintech firm HelloGold announced that its gold backed token, GOLDX, has been certified as being compliant with Islamic financial law.
GOLDX is backed by physical investment-grade gold, with each token equal to one gram. The gold is stored in a vault in Singapore. HelloGold says that it never issues a GOLDX token unless it holds its equivalent amount of gold, and to guarantee transparency its records are publicly accessible and verified independently by its vaulting partner.
Investors can buy GOLDX tokens using cryptocurrencies, including Bitcoin and Ethereum. It provides them with exposure on gold through a digital token, as well as a liquid investment vehicle as the token itself is transferable between Ethereum wallets.
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The question of whether cryptocurrencies themselves comply with Islamic law has not been addressed. However, the certification by Amanie Advisors of Malaysia, a sharia advisory company specializing in Islamic financial institutions, is expected to stimulate investment in the blockchain-based platform within the Muslim world.
The authorization opens up investment opportunities in digital currency products to Muslims around the world, which could see a spike in demand after being adjusted to the new guidelines.
All economic activity in Islamic finance must be compliant with sharia law, which has stringent rules to ensure certainty and immediacy of transactions. Islamic law also prohibits the acceptance of interest or fees for loans of money.
Commenting on the news, Robin Lee, co-founder and CEO of HelloGold, said: “Having earned the world’s first Syariah-compliance certification for our GOLDX token, HelloGold has opened the door to over a billion Muslims to access a new financial product. As the international Islamic financial market continues to grow and draw interest from non-Muslim countries, the Islamic financial services industry’s total worth has reached US$1.9 trillion (RM7.4 trillion) in 2016.”