Is Forex Trading Haram?

Cryptocurrency, as it is known today, started with Bitcoin as the first decentralised cryptocurrency in the modern world. The first Bitcoin transaction took place as far back as 2009 and ever since Bitcoin has grown into a global phenomenon bypassing traditional finance systems and banks. Islamic cryptocurrency, also known widely as Islamic coin, began to emerge in the late 2010s as the demand for Sharia-compliant digital assets grew.

Islamic coin is Sharia-compliant cryptocurrency that adheres to Islamic finance rules relating to financial transactions and exchange. This article will examine the benefits of Islamic coins and their relevance in the modern world of finance.

Cryptocurrency And Islamic Finance

Over the years Islamic finance and the world of cryptocurrency exchange and platforms have become increasingly interconnected. Islamic coin merges the traditional with the modern, uniting decentralised currencies with Sharia principles.

Not only does the Islamic coin stand as a testament to the thriving impact of Islamic finance on the modern world, but it also offers Muslims an alternative and innovative way of managing their money.

Two notable initiatives relating to Islamic coin are the First Islamic Crypto Exchange (FICE) and project Onegram. Project Onegram is a project that aims to create an Islamic cryptocurrency coin that is backed by gold reserves. Users of the coin are able to store their coins in a digital wallet and transact securely.

FICE is an Islamic initiative aiming to provide an Islamic digital platform for cryptocurrency transactions that are fully compliant with Islamic finance rules.

The main features of FICE are:

• it employs ethical screening
• it incorporates community governance within its structure and operations
• it offers Sharia-compliant trading

FICE and Onegram are both efforts to bridge the gap between Islamic finance and blockchain technology. The aim is to offer Sharia compliant solutions to Muslim investors in the realm of digital and decentralised finance.

Main Features Of Islamic Cryptocurrency

There are some key features that differentiate Islamic coin from other cryptocurrencies:

1. Asset backing - Islamic coin is based on a system of asset backing. This not only provides intrinsic value but also stability in line with Sharia rules. Often the digital coin is pegged to assets that are tangible such as gold, real estate, silver, and commodities.
2. Transparency: Islamic coin transactions must be transparent if they are to comply with Islamic finance rules. This means any trade, investment, platform being used, sales, prices, return, market, service, and exchange involved must be halal and transparent.
3. Sharia law: Islamic coin must be Sharia compliant. This means the coin itself cannot be involved in any form of interest, uncertainty, or speculation.
4. Governance: the governance relating to Islamic coins is usually decentralised. This is looked upon favourably by Islamic finance as it means there is more scope for the community to be actively engaged in the governance structures and processes.
5. Regulation: Islamic coins, whether in the UK or abroad, must comply with regulatory frameworks that govern digital assets and finance. Digital assets are seen as a valuable commodity and many countries already have robust regulatory frameworks in place.

WHAT IS AN ISLAMIC COIN?

Islamic coins are essentially a form of cryptocurrency that is Sharia compliant. Muslims have an incentive to partake in Islamic coin trades and investment as they can be reassured that the coin is fully halal.

Of course, this means the coin must be certified as Sharia-compliant by experts with knowledge of Sharia law and rules.

For example, Islamic coin cannot be aligned or involved with any industry or market that is prohibited in Islam such as the gambling or alcohol industry. There is also a requirement that Islamic coin investment considers social benefit and social purpose as per Islamic finance rules. The ethics of the management and investment of Islamic coin are also important for adherence with Islamic finance.

WHAT ARE THE BENEFITS OF ISLAMIC COIN?

Islamic coin offers many benefits to its users:

• It is Sharia-compliant and aligns with Islamic principles
• It is transparent
• It is stable
• It facilitates the creation of strategic partnerships and ethical investment
• It provides innovative financial solutions
• It supports marginalised communities
• It uses ethical investment criteria
• It facilitates and enables financial inclusion
• It enables cross-border transactions
• It operates on a profit and loss sharing arrangement
• The HAQQ platform screens for Sharia compliancy

Islamic coins offer many benefits to Muslim participants and investors looking for halal ways to invest and trade. As the cryptocurrency financial ecosystem continues to evolve, Islamic coin will play a key role in shaping the future of Islamic cryptocurrency and digital assets.

WHAT IS THE DIFFERENCE BETWEEN ISLAMIC COIN AND BITCOIN?

When considering cryptocurrency, the question always arises about the difference between Bitcoin and Islamic coin. The main difference is that Islamic coin adheres to Islamic finance principles. The very existence of Islamic coin is to ensure that Sharia rules are complied with and there is no such obligation on Bitcoin.

Whilst both coins operate on decentralised platforms, Islamic coin should incorporate more transparent structures of governance leading to greater accountability and proof of adherence.

In addition, another key difference is that Islamic coin needs to follow ethical investment screening and criteria in order to the compliant with Islamic finance. Islamic coins operate on the HAQQ blockchain.

Whilst there are similarities in the nature of both Bitcoin and Islamic coin, the main difference is that Islamic coin adheres to a different set of values and principles. Users of Islamic coin will therefore seek assurance of compliance with Islamic rules relating to finances.

WHAT IS THE FUTURE OF ISLAMIC COIN?

More and more Muslims are looking to invest in and trade in Islamic coin. The Sharia Authority which was formed for the purpose of making decisions on the validity of cryptocurrency has stated that Islamic coin is a financial asset that can be traded whether that is by sale and purchase, or traded for goods and services.

Islamic coin holds great potential in the crypto world. As the crypto ecosystem and infrastructure continue to evolve there are some trends that suggest Islamic coin will see great growth in the coming years:

• Global financial inclusion: Islamic coin is playing a central role in making sure underserved Muslim-majority regions are able to partake in digital currencies. The demand is already there and is growing.
• Islamic finance growth: as the Sharia compliant finance industry grows so too does the demand for the accompanying digital ecosystem.
• Evolving markets: as the dynamics of markets in the world continue to grow and develop, Islamic coin is predicted to grow alongside them. Collaboration and innovations are already being seen across many different regions.
• Adoption: increased adoption of Islamic coins will lead to greater liquidity, market development, and acceptance.

WHAT ARE OTHER HALAL COINS TO INVEST IN?

Whilst the list of halal cryptocurrencies is growing, it is important to note that cryptocurrencies as digital assets are not deemed to be automatically compliant. They need to be screened by experts against Sharia principles. Some coins that have been deemed to be halal include:

• ZRX
• ELF
• Aion
• Alchemy Pay
• ASTA
• BEAM
• Cardano ADA
• Chainlink

There are many other coins that are deemed to be Sharia-compliant, but in each case you must do your own research and satisfy yourself.

In traditional and western retirement planning there was one main model used for investing and that was the one that created the most profit with any given risk tolerance. However, in recent years, the demand for Sharia compliant retirement planning has grown. This growth alongside the demand for more socially responsible investment means that Islamic finance has created Sharia compliant options for retirement planning.

Socially responsible investing is at the heart of Sharia law. What it means for those looking to build a halal retirement fund is that it limits an investor's portfolio to those kinds of investments that are deemed to be socially responsible.

Retirement Planning

Retirement planning is a key part of planning for the future. It is important for many different reasons including the following:

• Maintaining quality of life
• Facilitating financial independence
• Inflation protection
• Reducing financial stress in later years
• Managing longer life expectancy
• Covering benefits and pension gaps in later years
• Legacy planning
• Facilitating early retirement

Retirement planning ensures that you take a strategic and proactive approach in planning for your future. It is a means of securing your financial future with a roadmap for saving, investment and managing your finances.

WHAT IS SHARIA COMPLIANT RETIREMENT PLANNING?

Sharia compliant retirement planning refers to making financial arrangements for your future that do not contravene Islamic rules relating to financial transactions and savings.

Retirement planning in a Sharia focused manner refers to preparing for retirement whilst adhering to ethical guidelines outlined in Islamic finance.

Let's examine some of the key principles related to Sharia compliant retirement planning:

1. Interest - the main rule for halal retirement planning is that you must avoid riba (interest). Islam strictly prohibits any form of interest. If you are planning for your retirement make sure that none of your investments and savings accounts are not linked to interest in any way. In fact, you should ensure that any product, service, or company you deal with does not include interest based products or the payment of interest.
2. Risk and profit sharing: Islamic finance rests on the principle that transactions and deals should result in both parties sharing the risk and profit. This creates a more equitable relationship when dealing with money.
3. Ethical investment: retirement planning that is halal encourages ethical and socially responsible investing strategies. This means that you should look to invest in industries and companies that lead to social benefit (ie education, healthcare, relieving poverty) and stay away from companies that are involved in haram industries such as gambling, war, and alcohol.
4. Charity: although not necessarily related to retirement saving, ensuring you keep up with your zakat and sadaqah payments during your life is important. Not only does this form of charity enhance your adherence to Islam, but it also means that you can set aside money or a portion of your wealth for charitable purposes later on in your life.
5. Avoidance of speculation: if you are retirement planning then you need to be choosing products and investment options that are secure. Avoiding speculative products and markets means your long term planning is on more stable ground. Islam seeks to minimise ambiguity and uncertainty in financial dealings. As an investor, you should seek those investments that are asset backed and tangible.

WHAT IS AN INVESTMENT?

An investment is something that you invest in to generate a return. When it comes to halal retirement planning, a halal investment is one that complies with Islamic rules.

There are more products, services and investment options on the market than ever before. Islamic finance is still a dynamic industry, so for anyone looking to plan for their retirement and future you should know that there are many products already on the market.

When it comes to stocks and equities, Muslim investors can construct a portfolio that is Sharia compliant by ensuring that they research the companies, choosing those investments that meet the Islamic finance criteria of being compliant.

Types Of Retirement Accounts

When planning for retirement there are a few different options. You can either use regular investment accounts and earmark part of the savings specifically for long-term investment. Or, you can use retirement accounts that are created for the sole purpose of future planning.

In the UK, there are Islamic pensions that do comply with Sharia principles. They focus on investing in halal industries and assets, using a halal investment plan.

Another form of long-term investment planning includes real estate. For many people, property is a means of planning for your retirement. There are many halal mortgage options in the UK and European markets for Muslims to access. These mortgages are structured to ensure the individual does not have to pay or be charged interest to the bank that provides the mortgage as a lender.

Sharia Compliant Pensions

As an employee in the UK, it is very likely that you are already paying into a workplace pension. In addition to this, you can also have a private pension to supplement your income in retirement.

There are various Islamic pension schemes available, alongside halal Islamic bonds called sukuk and other investments that are Sharia compliant.

Muslims can also look into having a halal SIPP which are self-invested personal plans. These plans are a type of pension that provide individuals with the flexibility to create their own pension portfolio. A halal SIPP is one where the requirement of the pension investments is that they are Sharia compliant.

SHARIA RETIREMENT PLANS - WHY HAVE THEM?

There are many reasons why you should have a Sharia compliant retirement plan, not least so that you adhere to Islamic rules.

As we become an aging population it is more important than ever to ensure we have the means to live and survive as we age.

Sharia retirement plans are necessary because they:

• are a form of voluntary Islamic pension so you can adequately plan for retirement.
• provide opportunity to manage the risk and return for the future
• create a flexible investment plan
• are Sharia compliancy
• lead to secure, halal financial planning

For anyone looking to build a secure halal retirement plan you need to research and make all the relevant enquiries as soon as you can. Look into banks, financial institutions and services that provide pensions and future planning.

Consult with Islamic scholars and financial advisors who are knowledgeable about Islamic finance and give you accurate information.

Remember, the Islamic finance offerings and landscape is ever-changing and growing and the value of its services should not be underestimated. As the economy continues to fluctuate it is important to understand the commercial and business process relating to retirement planning. Understand what it is you need for the future and start making plans now.

Determining Sharia compliancy is a critical part of halal retirement planning. You need to be able to evaluate an investment and eliminate any element of haram so that it aligns with your Islamic belief system.

As more and more people attempt to get their foot onto the property ladder, this article will examine in detail the alternatives to conventional mortgages. In recent years there has been significant growth in alternatives to traditional mortgages, and what this means in principle is more choice for those looking to purchase assets or property in a Sharia compliant way.

There are many different reasons why people look for alternatives to mortgages:

• Flexibility: people want more flexibility when it comes to financing property or asset purchases.
• Accessibility: for some investors, alternatives to interest-based mortgage products are problematic as they contravene Islamic finance rules and ethical investment principles.
• Cost: alternative mortgage products can be cheaper overall than the standard mortgage products available in the UK, especially for those with poor credit scores.
• Less risky: there is sometimes less risk associated with alternative mortgages.

ALTERNATIVE MORTGAGES - WHY?

A conventional mortgage arrangement exists as a loan between a lender (bank) and an individual or company. The lender lends you the money to buy the property and in return, the borrower repays the money they have borrowed plus interest.

The mortgage loan itself is secured against the property and against the value of the property.

For many potential homeowners, a conventional mortgage is not a viable option, especially those looking for Islamic finance or ethical mortgages.

One of the main reasons traditional mortgages are shunned is that they are interest-centred and therefore not Sharia compliant. This has led to Muslims and ethical investors looking for alternative financial products to source funding when buying a property.

Interest is strictly prohibited under Islamic finance rules, so Muslims have had to look outside the traditional mortgage market in order to secure funding for their real estate and asset purchases.

However, it is not only Muslims who are looking at the market for alternatives to traditional mortgage products and services. As the ethical finance market continues to grow, many ethical investors and purchasers are also looking to secure funding that comes without hefty interest payments and charges.

Islamic banks and products under the Islamic finance banner are often considered to be a safer option than the finance options available on the mainstream finance market. The reason for this is that they are seen as less risky and less speculative.

Let's have a look at the alternatives out there and whether or not they are deemed to be halal or haram under Sharia rules.

Buy To Let Loans

Buy-to-let mortgage loans are designed for those people or businesses who want to purchase real estate properties with the purpose of renting the property out. Once the property is let, the homeowner then generates revenue through the rent payments they receive from the tenant.

Normally, these types of mortgages are based on higher interest rates than conventional mortgages and for this reason alone they are not Sharia compliant and are deemed to be haram.

There are some Islamic banks within the UK that offer a buy-to-let mortgage product, and if you want to review what is on offer you need to make sure that the product is 100% Sharia compliant.

Certainly, conventional buy-to-let mortgages that include interest in the repayment structure are not permissible for Muslims.

Home Purchase Plans

Home purchase plans are structured to avoid the charging and paying of interest. Normally a home purchase plan will involve the bank and the homeowner taking part in a shared investment strategy.

The bank, or financial institution, will purchase the property outright on behalf of the homeowner. The bank and the homeowner will agree the payments that the homeowner will make to the bank in lieu of repayment.

The homeowner will then make the repayments to the bank until they have paid off the pre-agreed price of the property. Once all the payments have been made the homeowner will own the property outright.

Home purchase plans give customers the opportunity to get on the property ladder in a halal and Sharia compliant way.

This type of co-ownership arrangement means the bank and the borrower share the risk and no interest is payable.

Shared Ownership Schemes

A shared ownership mortgage enables the purchaser to buy a share of the property. The purchaser then pays rent on the remaining share which is often owned by a non-profit organisation such as a registered social housing provider.

Shared ownership schemes were developed to enable people to get on the property ladder in an affordable way.

When structured correctly, shared ownership mortgages can be halal. If the share (of ownership) being purchased is clearly defined, and the rent on the remaining share is based on payments which are fair then this could be considered a halal alternative to an interest-based mortgage.

Make sure that the rental payments do not attract any interest, and that the terms and conditions of the ownership scheme are clear and concise. In the United Kingdom, shared ownership schemes are regulated and can often be an effective way to get on the property ladder.

If you are interested in a shared ownership scheme, look to see if they are being offered in your local area, and then look to see if any Islamic banks are offering shared ownership services.

Guarantor Mortgages

Guarantor mortgages are for those people who are unable to purchase a property, or secure funding to make the purchase, on their own.

A guarantor is involved who guarantees that they will repay the mortgage loan amount if the borrower does not make the payments.

Usually, the guarantor is a family member or close friend.

Whilst Islamic finance does permit the concept of a guarantor, in order for the service to be halal it needs to follow Sharia rules relating to such transactions. For example, a guarantor can be involved in a joint purchase transaction. In this type of financial transaction, the guarantor owns a share of the property and the risks are shared.

This is a musharakah arrangement - that is a profit-sharing arrangement or partnership.

If the guarantor mortgage is simply one where the guarantor guarantees the loan repayments with zero ownership rights then this is not permissible under Sharia rules.

Crowdfunding

Crowdfunding is a relatively new alternative to conventional mortgages. In its very basic form, crowdfunding operates by way of a collection of funds from a crowd of people (investors).

Whilst historically, investment markets have tended to be reliant on interest. However, Islamic crowdfunding is an activity that is deemed to be halal. Funds collected from a community have never been prohibited. In fact, crowdfunding in its very essence can have a positive social impact and this is a key principle of Islamic finance - social responsibility and ethical finance.

Anyone considering crowdfunding should ensure that the crowdfunding arrangement is set up to be fully Sharia compliant.

Self-Build Mortgages

Self-build mortgages are for those people who want to build their own homes. What this means in principle is that the loan is released to the borrower in stages that coincide with the stages of the build taking place. The final loan amount if based on the value of the property once it has been fully completed.

This type of alternative to the conventional mortgage is not halal as it still incurs the same type of interest payment as a standard up-front mortgage does.

Conclusions

Muslims have been wanting Sharia compliant alternatives to standard mortgages for many years. To address this, banks in England and other western economies have developed Sharia compliant alternatives that enable Muslim and ethical investors to buy a house or a business property/asset.

Halal alternatives to interest-based mortgages have several unique features. They are less risky, less speculative, and more socially responsible.