DeFi platform Marhaba is tapping into the $3 trillion Islamic finance sector with Halal-compliant NFTs

Marhaba DeFi Network (MRHB), a Muslim-focused ethical decentralized finance platform, has launched what it calls the “world’s first” certifications for non-fungible tokens (NFTs) that are Halal compliant.

The certifications, hosted on MRHB’s SouqNFT marketplace, could help businesses bring transparency to their work by enabling them “to provide their customers with definitive proof that their business practices are halal and acceptable to Muslims.” .

“The lack of trust of NFT-based Halal compliance certifications fills a pressing need in the Halal economy sector where certificate forgery is common or difficult to validate,” MRHB Founder and CEO Naquib Mohammed told BeInCrypto.

“NFTs are unique and neither replaceable nor interchangeable – making them a perfect technology for immutable certificates,” he added. He said the “first” entity to receive such Halal compliance certification was Cache Gold, a Singapore-based gold crypto platform.

How does the certification process work?

Under the scheme, companies wishing to comply with Sharia law can now do so by contacting London-based Shariah Experts Ltd. get certified, a halal consultancy specializing in Web3 projects.

The company uses the SouqNFT platform to issue and mint the halal certificates on the blockchain, in a new use case for NFTs. Until now, Halal certification has mainly been done on paper or digitally, but this has tended to expose users to “counterfeiting and slow verification processes”.

Mohammed said every project within the MRHB ecosystem is vetted for humility and morality, in line with halal, an Arabic concept that describes what is permissible under Islamic law.

While SouqNFT also hosts non-fungible tokens that are halal but not certified, its screening process typically checks all NFTs for issues such as nudity, hate speech, racism, and authenticity, be it in the form of an image, video, or audio, he explains .

“The full transparency of the blockchain also means that anyone can easily match a certificate against Shariah Expert’s public key to verify beyond a reasonable doubt that it was this particular Shariah consulting firm that coined the NFT and issued the certificate. By default, NFTs include proof of ownership,” Mohammed said.

$2.7 trillion Islamic finance sector disapproves of bitcoin

Sharia compliance is a key customer need and regulatory requirement in several Muslim markets. However, the legitimacy of crypto assets like Bitcoin (BTC) remains a subject of great controversy.

Prominent Islamic leaders have labeled bitcoin “haram” – meaning it is prohibited under Sharia law as the asset can be used for illegal activities such as money laundering, gambling and fraud prohibited by the Koran.

There are also some concerns about a lack of central authority and how digital currencies are stripping governments and central banks of their power over national monetary systems. In November, a leading Islamic scholar from Indonesia, Asrorun Niam Sholeh, issued a religious statement, or fatwa, warning followers against crypto investing, saying, “It’s like a gambling bet.”

With this in mind, Naquib Mohammed’s MRHB DeFi network is entering the NFT space, hoping to lure the conservative Muslim believers with its halal-compliant, non-fungible tokens. The network aims to tap into an Islamic financial sector believed to be worth more than $2.7 trillion and serving a billion people, according to British Muslim financial platform Qardus. In explanation, Mohammed said:

“MRHB effectively acts as a gateway for Islamic liquidity to flow into the crypto market. As Islamic liquidity flows in, so will interest in NFTs. We are creating a new market.”

Sharia Compliance Threatens DeFi Autonomy?

While MRHB considers itself decentralized, its verification processes to enforce Halal compliance can amount to gatekeeping. This is anathema to the DeFi ethos, which thrives on autonomy and challenges the status quo. But Mohammed claimed:

“We definitely control certain aspects, like listing and operations, within a select set of protocols, but once verified by the Sharia team, the decentralized aspects will not be affected.”

He explained that besides religious considerations, the fundamentals of the halal compliant NFT are also acceptable to non-Islamists as the standard expectations are in line with what is commonly seen as ethical weaving practices.

MRHB says it is building an ecosystem of DeFi products and services “specifically designed for ethically conscious people like Muslims.” In 2021, the company raised $5.5 million in an initial Dex offering (IDO). It has since launched a crypto halal wallet called Sahal and has partnered with 14 companies including Polygon.

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