IOTA receives Shari’a certificate and sets a precedent for ethical finance

ABU DHABI. August 6, 2024 – IOTA, an open-source distributed ledger technology (DLT) for Web3 applications and digital economies, today announces that the IOTA token is Shari’a-compliant. 

This certification by the Cambridge Institute of Islamic Finance states that the IOTA token fulfills all accepted Shari’a principles and standards, including those practiced and adopted in the Islamic financial services industry. As the first foundation under the DLT Foundations Regulations of the Abu Dhabi Global Market (ADGM), the IOTA Ecosystem DLT Foundation is at the forefront of digital convergence in the MENA region. With its expansion into the UAE, the Foundation recognized the importance of ensuring that its processes, procedures, offerings, and the IOTA token align with Shari’a law. This is the system of Islamic principles and guidelines derived from the Qur’an and Hadith that govern the moral, social, and legal aspects of Muslim life. 

The combination of Shari’a compliance and the ADGM’s progressive regulatory framework attracts a new segment of investors, enhancing the liquidity and stability of the IOTA token. This will open new partnership opportunities in the Middle East and Southeast Asia and pave the way for blockchain projects in the IOTA ecosystem that require a Shari’a-compliant foundation for their decentralized applications. 

For instance, in the supply chain segment, projects such as halal meat verification for fast food companies can now leverage IOTA’s Shari’a compliance. Other projects building on IOTA that benefit from this certification include those focusing on Islamic banking, Islamic Insurance (Takaful), and other areas where adherence to Shari’a law is pivotal. 

In terms of the broader finance sector, it facilitates inclusion by providing Islamic investors with access to innovative products like the IOTA token. Compliance with Shari’a-specific finance regulations also ensures smoother operations and reduces legal risks, enhancing investor confidence. Finally, external oversight – an obligatory part of Shari’a compliance – means that there will be continuous compliance and rigorous governance, establishing a model and best practices for other financial entities to follow across the sector.

“Shari’a compliance significantly benefits the IOTA Ecosystem DLT Foundation by enhancing its credibility and ethical standards, which are essential for promoting IOTA technology and the IOTA token within Muslim communities,” says Dominik Schiener, Co-Founder and Chair of the IOTA Foundation. “This compliance supports the Foundation’s work in helping grow and nurture DLT and blockchain projects in the Middle East, including homegrown initiatives and external projects seeking regional entry.”

Find out more about Shari’a compliance on the IOTA Foundation’s blog here.