Web3 and Shari’ah Compliance

How to ensure the adherence to the Islamic values in the era of the Internet 3.0

V1.0
Foreword

This publication aims to provide a high level overview over the principles At the same time, my and million of Muslims’ crypto activities was going
of the Islamic finance (known in the West world as “ethical finance”) and on. I was imagining that if certain specific crypto operations were going
their application in the context of web3. beyond the boundaries of the concept of halal, it was time to deploy an
extra effort with the attempt to finally clarify the matter.
As part of a highly disruptive and fast-evolving landscape, the crypto
universe it definitely affected by risks, transparency issues and non Is important to realize that if you are a crypto trader and you are
robust regulations and framework that identify and establish clear adopting a binary option strategy (dozens of positions opened a
guidelines based on the specific use cases, across industries. minute), you can imagine the daily amount of major sins cumulated. On
the other hand, if you are the founder of an exchange (DEX,CEX,HEX –
Moreover, most of the web3 economy is currently based on the see my deck “Web3 Economy”) which is exploiting unlawful
traditional financial model, which is in strong contradiction with the key conventional finance leverages, you are literally consuming every second
guidelines issued by the main Islamic and Jewish financial institutions Riba (interest) which, as every Muslim knows, is one of the worst crimes
and governance bodies. in Islam.

Before drafting this deck, I was feeling in continuous doubt regarding the Finally, although this work makes me proud as web3 enthusiast and as
surrounding crypto activities: is what we are all doing permissible by Muslim, I want to specify that the following material shouldn’t in any
God? This question was echoing in my mind for several time. case be considered as a professional guideline and in no way should be
substitutive of a proper Shari’ah compliance consulting. I would
On top of that, I was not able to find any complete and exhaustive recommend to do your own researches and ask to scholars and a shaykh
reference online aiming to clarify this extremely delicate matter. At the whether what you are reading in this deck can be applicable to your
same time, my and million of Muslims’ crypto activities was going on. I specific case.
was imagining that if certain specific crypto operations were going
beyond the boundaries of the concept of halal, it was time to deploy an Feel free to provide your feedback and God knows best.
extra effort with the attempt to finally clarify the matter.
 Table of Contents
01 Introduction
What is the Web 3.0
Pages 01-10

02 Web3 Economy
Definition and categorization of digital assets
Pages 12-16

Pages 18-27
03 Islamic Finance
Pillars of the Islamic finance, contract types

Pages 30-40
04 Screening Methodologies
Shari’ah compliance screening methodologies

Shari’ah Compliance Pages 43-55

Compliance, areas of focus and recommendations
1. Introduction

01 A new world economy

02 Components of Web3

03 The Web3 Equation

04 Breakdown of the Web3 Equation

05 Why Web3 Matters

06 Web3 Tech Stack Layers

07 Web3: What is it about?

08 Web3 – What changes

09 Weren’t these features already in Web2?

10 Centralized vs Decentralized

Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

A new world economy

The world is clearly changing and it’s happening now, in front of Web2 economy Web3 economy Web2.5 economy
us. While writing this report, I feel that the information I am at
disposal to produce a high-quality deck is already outdates. This
is because of the technological and innovation curve is
exponential, which means that the more we advance the faster
we progress. It’s nice to know that this behavior is happening
after the 1st Industrial Revolution in Europe, before was pretty
much “linear” (given the Middle-Age cultural fall). As for each
innovation stage, we are now experiencing a real change of
paradigm, where the technology determines the rise of human
Investments are based on a Investing innovation is based on Industry legacy transitions start
and philosophical questions and debates. What today is happening also though
“benchmark” economics. new economics (tokenomics).
changing is an immersive and fluid interaction with the machine Business alternative governance (DAOs)
(hardware) and its content (software). Users will in the future and tokenomics.
“approach” to the machine, rather than “use”. In the current
plethora of trends, polluted by the market hype (useful for old Data is acquired and stored, Data is: digitally native (on- Integration to the web2 data,
the obsolete is kept chain), individually-community new digitally native data (on-
brand that leverage it for marketing purposes), we need today Data (complyingwith GDPR) governed and tradable. chain).
more than ever solid and smart regulations, which can indicate
to regulators and policy makers opportunities and constraints.
But before that, regulators and policy-makers need first to have
some basic knowledge about the matter. The purpose of this Achieving the max degree Contribution-based interaction Process built around users’ control
Process of automation. and rewarding for creators. of their own data.
document is exactly to provide this basic understanding, before
pointing out to strategic objectives and potential roadmaps.

We are here

01
 Introduction Web3 Economy Islamic Finance Methodologies

Components of the Web3

The Internet 3.0 has effect on several areas of innovation

and multiple capabilities. More specifically, Web3 can be
schematized as the aggregation of pre-existing entities and Website
technologies that are combined as follows:

• Blockchain: decentralized, trustless and p2p network

that stores all the information of the chain, consisting
in transactions between users on the ledger.

• UI/UX 3.0: it represents the new way of engaging

users and to enhance remote collaboration, in other
words can be called Metaverse.
Web3
• AI & Big Data: Semantic web and NLP will heavily
contribute to make the interaction between user and
machine more “human”. AI & Big
Blockchain
Data

UI/UX
3.0

02
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

The Web3 Equation

Web3 as sum of the following components

+ + +
Website DLT UI/UX 3.0 AI and Big Data
Interconnection,
World Wide Web Unique User
Decentralization Personalization,
Application Experience
Semantics

Blockchain Metaverse Semantic Web

03
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Web3 Equation Breakdown

Blockchain should be imagined as both a governance technology and a financial technology

The Web 3.0 equation

Web3 components DLT (Blockchain) + AI/Semantic Web + Metaverse

Areas of Innovation Identity Ownership Governance Value Customer Experience Collaboration

Users can directly

C apabilities Privacy Decentralization Liquidity Democracy (*) Create data Build Write data
Fully sensorial interaction
stores vocabularies rules

XR

Means Cryptography DAOs • Assets tokenization, DeFi

• NFTs
fractionalization,
• Other secondary
markets
RDF, SPARQL, OWL, SKOS AR VR

(SHA256, ZKP, Governance token • ERC-20

Tools (security token –
etc.) ERC20 in Ethereum) • ERC-21

Smart Contracts

04
(*) Quick payments, Inclusive finance (i.e. loans) and Low transaction fees
Source: “Web3 Economy” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Why Web3 Matters

People will have more control over their Web3 empowers user with ownership. It’s
data and they can monetize them by selling about the direct connection between creators
Text
directly to the end-consumers. Web3 Social — Text and consumers, obfuscating the gatekeepers.
Media could allow users to monetize their Data Text Creators
— Text Text
own data, or even earn crypto “tips” from Ownership Economy— Text
other users for posting interesting content. Text
— Text

As Web3 runs on blockchain, user Web3 will use artificial intelligence (AI),
information remains more safe and secure AI-tailored machine learning(ML), and the semantic
Security
than it would be in the centralized web. Web3 paves the way for a future in
architecture Content which different people and machines can
interact with data, value, and other
counterparties without the involvement of
third parties

05
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Web3 Tech Stack Layers

The Internet 3.0 capabilities have, among other things, empowered users and content creators. This has been possible thanks to the way the web3 architecture (tech stack) is
designed.

Wallets Custody
Wallets and Custody (Layer 4)

Read-Write Mechanisms for protecting digital

Read only Read-Write-Own assets’ keys and related data

Applications (Layer 3)

Solutions built on top of DLTs that

cater to specific needs

Eth. Roll-ups State channels Sidechains Oracles Bridges

Enablers (Layer 2)

Solutions that improve protocol

extensibility and scalability

Protocols (Layer 1)

Underlying blockchains and other

DLTs that process transactions and
Web1 Web2 Web3 store value

06
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

What Web3 is all about

Public Key

Among other things, the Internet 3.0 will shape 4 main areas of
“innovation”: Private Key

Cryptography
• Identity: where the users is in controls of his own data and
can decide whether to keep them secret or to monetize
them. In the web3, each users connects his own
decentralized wallet to the browser, where identity and Identity Wallet
crypto assets are stored. A public key identities a unique
address (utilized for the transactions or change of Security Token
ownerships), while a private key represents the secret code
to authorize transactions. Made easy, the public key is like
the IBAN and the private key is the CVV.
Tokenomics Liquidity
• Value: Tokenomics and tokenization of illiquid assets will What Value
generate a value that will first be purely digital and, after a Web3 is all Voting Token
wider adoption, will become part of the real world asset

Smart Contracts
intrinsic value.
about
DAO
• Governance: Though the Decentralized Autonomous
Organization model, web3 enterprises’ governance will be Governance
dictated by voting sessions, whose participants have voting
rights proportional to their entry capital. ERC-721 (Ethereum)

• Ownership: Being complementary to the identity,

ownership will be granted by specific non fungible tokens Non-fungible tokens
(NFTs), allowing to map each (on-chain represented or
native) digital assets to a specific owner, except for the
fractionalization case. Ownership
07
Source: “Web3 Economy” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Web3 – What changes

Some of the drivers fueling the shift from Web2 Web2 Web3
to Web3 are:
Data Central control of the provider User controls and owns its data
Digital liquidity – Enormous amount of Platform posture Closed Mainly open source
transactions (real time processed), based on
value (or fractions of it) that is recognized by Identity Identity gets controlled (not-deeply) Identity verification from the ledger
the entire community.
Incentive model Winners earns all Cooperation and royalties-based model
Change of the governance model – absence of
a central body (i.e. Big Tech like Google or Liquidity Subordinated to operational time Real time available and fruibile
Microsoft) and users’ empowerment though
Monetization Platforms and content-creators (i.e. YT) Data owners, creators, platforms
incentive models where the benefits are fairly
shared across the owners of the data and the
content-creators. In particular Smart contracts Owns
and tokens distribute power amongst token Community data
(network) is Generates
holders. Service User data independent
king
value
This produces a bi-univocal model, based not

Web3
Web2
on a client-server logic, but rather on a
collaborative governance, where the users are
in control of how their own data is used and
everyone “wins” in proportions to its own
rights. Today you are just a subscriber to a Value of the service/product
website, possibly a consumer. In the Internet depends exclusively on the Value of the service/product depends on how big
provider capabilities is the network.
3.0, you are an owner of a part of it.

08
Source: “Web3 Economy” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Web2 to Web3

Weren’t these features already in Web2?

Web3 is not a sudden disruption, but rather a long and Web3 Web3 Web3
ongoing process that will completely revolutionize the
way we use and approach to Internet. More
specifically, Web3 is a process made of progressive
integration of disruptive technologies, all combined to
provide users with the highest personalized and
enjoyable experience. In other words, Web3 is the
destination, not the path.
Web2 Web2 Web2

Web2 with Blockchain Web2 with AI Web2 with Metaverse

09
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Centralized vs Decentralized

Centralized Decentralized
Web 2.0 refers to websites and applications that utilize
user-generated content for end users. Web 2.0 is used
in many websites today, chiefly focusing on user
interactivity and collaboration. Web 2.0 also focused
on providing more universal network connectivity and
communication channels. The difference between Web
2.0 and 3.0 is that Web 3.0 is more focused on the use
of technologies like machine learning and AI to provide
relevant content for each user instead of just the INTERNET
content other end users have provided. Web 2.0
essentially allows users to contribute and sometimes
collaborate on site content, while Web 3.0 will most
likely turn these jobs over to the semantic web and AI
technologies.

10
Source: “The Economy of Tokens” – Giorgio Torre
2. Web3 Economy

12 The Token Economy

13 Tokens and their function

14 Digital assets categorization

15 Types of Digital Assets

16 Evolution of Assets

Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

The token economy

The token economy is the definition we can provide to define

Key Elements of the token economy
the sum of all the revenues and transactions operated though a
distributed ledger technology (DLT). This type of digital economy Digital Asset Tokenization rethinks the
is entirely based on blockchain, where data is validated (by the • NFTs concepts of identity and access
mining nodes) and stored (by all the nodes of a network), while • Crypto rights, while unlocking an
preserving its immutability. In other words, no single entity or • CBDCs immense liquidity opportunity.
user is charge of the data storage/validation itself, but rather the • Stablecoins
community (network) becomes the only one authority. The way
the network agrees on the truthfulness of the data
(transactions), is regulated by the specific consensus
Process (piece of code in Python or
mechanism.
Solidity language) that codifies and

In general terms, a token can represent (or help to identify): Smart Contracts automate operations, when it
comes to business trading of digital
assets.
• a digital identity
• an on-chain or off-chain (physical or real-world) asset, or
• a specific value (or fraction of value), i.e. fractionalized NFTs
or F-NFTs.
Shared, trusted, timestamped and
In the middle between the concepts of identity and value, there
is also a need for representation of ownership, which is still the
Blockchain distributed database that stores
information and transactions.
job of tokens.

12
 Introduction Web3 Economy Islamic Finance Methodologies

Tokens and their function

Main types of token

The user controls access to their data via tokens and credentials in their
wallet. Payment tokens
Payment tokens offer an alternative decentralized payment tool for products and services
outside of traditional intermediary involvement like banks. Bitcoin is the most known
These tokens (and credentials): example.

• Give the users control and management of their identity (either for firm Stable tokens (*)
reputation of for the sake of KYC compliance). These have a similar use as payment tokens, but the prices of these coins are “pegged” to
track an underlying asset or security. They are marketed as less volatile cryptocurrency.

• Grant access and ownership of the user’s data (fungible or non-fungible), Utility tokens
i.e. to our medical records and how are they monetized. A unique concept token gives the holder the right, but not the obligation, to exercise their
token to purchase a good or service. This could be something like being the first in line to
• Provide users an extremely high digital liquidity (“web3 money”). purchase a product such as an iPhone, or perhaps a token that gives you a full-service car
wash.

What's important about “web3 money” is that it enables transfer of Security tokens
ownership and value at the same time. For example, Mr. Rossi just bought a These are traditional securities such as stocks and bonds that are “tokenized”—that is,
mutual fund and it takes seven days for the trade to settle and he has no idea converted into digital assets and then issued on a blockchain so they can be traded.
what price je is going to pay after 7 days. In the Token Economy, value and
Non-fungible tokens
ownership are transferred at the same time. Critically, we can do this in very A non-fungible token is a unique digital identifier that cannot be copied, substituted, or
small transactions and at great velocity. This is the magic sauce to build out subdivided, that is recorded in a blockchain, and that is used to certify authenticity and
these marketplaces, as we buy and sell access to data. ownership

(*) The first significant difference between stablecoins and CBDCs is the governing authority. With the popular stablecoins of the world, the governing authorities are private companies such as Circle and
Binance. CBDCs, on the other hand, will be created, controlled and regulated by the central banks of various countries. The second difference is that stablecoins are backed by an equal amount of fiat
currency. You can always exchange a stablecoin for an actual dollar which is stored in the reserves. CBDCs don't have any assets backing them, only the good old promise of the country’s central bank,
it is how all fiat currencies work. 13
 Introduction Web3 Economy Islamic Finance Methodologies

Digital assets categorization

Characteristics of assets
Characteristics Definition Examples

Tangible Has a physical existence. Land, Property, etc.

UTILITY TOKEN

NON-FUNGIBLE
Items are concepts that Services, ID, subscriptions
SECURITY TOKEN
Intangible
represent things.

“ASSET” TOKEN
Built using a common ERC-20 tokens (for Ethereum),
Fungible
standard. currency
Used for services, access and NFTs for identity and ownership
Type of objects that are Birth certificate, passport,
Non-fungible subscriptions. (decentralized identity).
unique academia certificates
Asset tokenization

Classification of crypto-assets PAYMENT TOKEN SECURITY TOKEN

“Asset” token

FUNGIBLE
Asset Class Definition

Representation of digital objects that express the purpose of

Payment token
acting as a medium of exchange or unit of account and
(“crypto-coin”)
implemented at a protocol level, for example, BTC, ETH. Direct expression of crypto-liquidity. Used to represent (on-chain) off-chain
Used for payments. assets.
On-chain representation of an off-chain asset but instead is a
Security-token
representation of ownership of a physical asset (for example
(“asset” token)
gold or oil, car, house) or non-physical assets (securities etc.)
INTANGIBLE TANGIBLE
Representation of digital objects that provide the right to access
Utility-token or utilize the value derived from it, for example, a service or
subscription.

14
Source: “The Economy of Tokens” – Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Types of Digital Assets

TYPES OF DIGITAL ASSETS

Fungible tokens are identical to each other and, therefore, can be used and transacted interchangeably.

NON-FUNGIBLE FUNGIBLE

CYPTOCURRENCY STABLECOIN CBDCs SECURITY TOKEN

Non-fungible tokens (NFTs) are unique and non-
interchangeable assets stored and transmissible on Cryptocurrency assets are Stable-coin assets are crypto CBDC assets are on-chain Security tokens are on-chain
blockchain, and can represent digitally native items or either the native asset of a tokens that are designed to representations of a fiat representations of traditional
physical items that exist in the real world (e.g., supply blockchain or created as part mirror the price of a fiat currency. Digital fiat assets securities that exist off-chain.
chain products). of a platform that is built on currency like the US dollar are tokenized fiat legally
an existing blockchain. recognized as cash and are
backed by fiat currency.

COIN TOKEN

Art Tickets Metaverse Land and Virtual

Properties

TOKEN

15
 Introduction Web3 Economy Islamic Finance Methodologies

Evolution of Assets

Evolution of digital assets

Traditional Fiat Currencies Use values Assets/ Securities

(or other means of (i.e. equity shares,
Assets (i.e. vouchers, tickets)
payment/trade) debts/bonds)

Tokenization Tokenization Tokenization

Payment tokens Utility tokens Asset/security tokens

Digital
Assets - Cryptocurrencies - Equity tokens (i.e.
- Access to services
- Stablecoins stocks)
- Access to use a platform
- CBDC - Debt tokens (i.e. bonds)

16
3. Islamic Finance

18 Islamic Finance: Introduction 27 Islamic Monetary System

19 Types of Riba

20 Types of Gharar

21 Sources of Islamic Finance

22 Objectives of Islamic Finance

23 Financing and contract types

24 Islamic Contracts Breakdown

25 Traditional vs Islamic finance

26 Current Monetary System

Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

Islamic Finance: Introduction

The Islamic finance is one of the main religious and academical disciplines of the Islamic studies. Its main purpose is to guide humanity though a legitimate, ethical and fruitful
financial, entrepreneurial and macro-economical behavior. In the West society, there have been recently several attempts to recreate a similar approach (“ethical finance”).

Prohibitions Main Sources

Interest on lending and sales

(Riba) Qur’an Sunnah

Excessive Investment Risk The Qur’an is the Holy Book for Muslim scholars refer to
(Gharar, due to extreme uncertainty)
Muslims and regarded as the “Sunnah” as the collection of
Final Revelations of God to His said and behaviors of the last
Prophet and Messenger, Prophet of humanity,
Gambling Muhammad Ibn Abdullah (sws). Muhammad (sws). With regards
(Maysir, gambling) The Qur’an is not only a to Islamic Finance, the majority
collection of Revelations, but it’s of scholars agree to consider the
itself a miracle or beauty and ahadith of the category “Sahih”,
Unethical Investments preservation, containing detailed which are:
(Prostitutions, weapons, drugs, intoxicants, scientific explanations of
alcohol, gambling etc. ) scientific phenomena whose • Sahih Al-Bukhari
humans have only recently • Sahih Muslim
Other Prohibitions found explanations to. • Sunan Al-Nasa’i
(Pork, violence, unappropriated clothing, • Sunan Abi Dawood
modern music) • Sunan Al-Tirmidhi
• Sunan Ibn Majah

18
 Introduction Web3 Economy Islamic Finance Methodologies

Types of Riba

There are two main types of Riba: the first is Riba al-nası’ah, which is the only type known to pre-Islamic Arabia. This is the riba collected in compensation for deferring a due debt to a
new term of deferment. This definition applies regardless of the source of the due debt: whether it resulted from a loan, or a deferred price in a sale. The second type of Riba is Riba
al-buyu (sales) for six goods (gold, silver, wheat, barley, salt, and dates). This is also known as Riba al-fadl, which was forbidden to prevent potential circumvention of the prohibition of
riba al-nası’ah, which can be effected by selling gold with a deferred price,

Riba al-nası’ah Riba al-buyu

Typical usury Interest on sales

19
 Introduction Web3 Economy Islamic Finance Methodologies

Types of Gharar

All the Islamic finance institutions and scholars agree on the following classification, with regards to Gharar (uncertainty) types:

Gharar Fahish Gharar Fahish

Major Uncertainty Minor Uncertainty

Uncertainty that is so great that it becomes Uncertainty that considered a normal
unacceptable (i.e. sale of non-existing object or phenomenon in the market.
unable to be deliveredat the moment of the sale).

20
 Introduction Web3 Economy Islamic Finance Methodologies

Sources of Islamic Finance

In order to define guidelines and to issue Fatwas (religious rulings) about the financial behavior of each human being, Islamic scholars can rely on the following sources

Represents the direct Revelation (Wahi) from God to the

Prophet Muhammad (sws). It has been unaltered by any
human alteration since 1400 years.

Represents the collection of saying and deeds of the

Prophet Muhammad (sws), which also contains references
to other Prophets (as).

When a specific subject is not of clear definition (in its

derivation), in order to define a specific Shari’ah ruling, the
consensus among scholars can hep to guide the believers.
As part of the analytical, empirical and rational tools at the
disposal of scholars, analogies between similar cases from
the Qur’an or Ahadith’ sources, help to better find answers
to religious debates.

Refers to independent reasoning by an expert in Islamic

law, or the thorough exertion of a jurist's mental faculty in
finding a solution to a legal question.

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 Introduction Web3 Economy Islamic Finance Methodologies

Objectives of Islamic Finance

The impact of Islamic finance can be displayed on 4 main levels: economy, religious, ethical/moral and social.

Objectives of Islamic Finance

Economic
Islamic objectives Ethical objectives Social objectives
objectives

Stimulate an individual Investors main goal is Profits should be based Profits are should be
and mutual growth, to adhere to the main on lawful, ethical and motivated by the desire
which elevates the prescriptions of the green activities. There of enhancing people’s
overall welfare of a Holy Qur’an and is no gain out of condition around the
society or a nation. Sunnah. immoral activities. investor.

22
 Introduction Web3 Economy Islamic Finance Methodologies

Financing and contract types

Types of Islamic Modes of Financing: Types of Islamic contracts:

Mudarabah
Murabahah
Mudarabah is an Islamic financial instrument, in which one party participates with money and the other with efforts. The profit shall be divided in
strict proportion, and no party shall be entitled to a predetermined amount of return. Financial losses shall be borne solely by the investor.
Debt-based or Musawamah
Trade-based
Murabahah
Products Salam
Murabahah refers to the sale of goods and the margin of profit is included in the sale price of goods. The subject of sale must exist, be owned by the
Istisna seller, and be in his physical or constructive possession. So, the seller assumes the risks of ownership. Murabahah requires an offer and acceptance,
which must include: Certainty of Price, Place of Delivery; and Date when the Price will be paid.

Mudarabah Ijarah
Ijarah generally means Islamic lease or rent, and it is a very popular Islamic mode of finance. Ijarah is selling the benefit of use or service, for a fixed
Equity-based
price or wage. The bank makes available an asset or equipment, such as a plant, office automation, or motor vehicle, for a fixed period and rent. The
Products corpus of the leased commodity remains in the ownership of the lessor, and only its usufruct is transferred to the lessee.
Musharakah
Musharakah
Musharakah is a business contract established by partners, who agree to share business profits and losses. Profits are distributed in the proportion
mutually agreed in the contract. If one or more partners choose to become non-working partners, the ratio of their profit cannot exceed their ratio
in capital investment.

Semi-debt Salam
Ijarah
based
Salam is an Islamic mode of financing, where the seller undertakes to supply specific goods at a future date, in consideration of a price fully paid in
advance, at the time of the contract. If the full amount is not paid, it will be tantamount to a sale of debt against debt, which is Haraam.

Istisna
It is one of the Islamic banking instruments where a buyer places an order to manufacture, assemble or construct something at an agreed price, and
to be delivered at a future date. The commodity must be known and specified, such as its kind, type, quality, and quantity. The price must also be
fixed in absolute and unambiguous terms, and it can be paid in a lump sum or in installments, as mutually agreed.

23
(In equity-based products, the profit is shared on an actual earning basis. Due to this reason, they are riskier than the other two categories, and so they are most preferred in Islamic Shariah.
 Introduction Web3 Economy Islamic Finance Methodologies

Islamic Contracts Breakdown

Key Islamic Commercial Contracts

Gratuitous Trading Investment Supporting

Contracts Contracts Contracts Contracts

Gift Leasing Sale Murabahah Kafalah

Waqf Musharakah Rahn

Loan Hiwalah

Ibra’ Operational Bay’ Bithman Wadiah

Lease Ajil (BBA)
Wakalah
Financial
Murabahah
Lease Jualah
Salam
Muqasah
Istisna etc.

24
 Introduction Web3 Economy Islamic Finance Methodologies

Traditional vs Islamic finance

# Traditional Finance Islamic Finance

Economics respond to positivism criteria, therefore are values and morals-agnostic. In other words Economics is values oriented, where the mechanism is
1 Foundation do not reflect any core moral principle or value, but rather respond to a mere logic of production based on permissible (halal) and unlawful (haram).
and consumption.
Investors are moved by a pecuniary interest, there is no focus the utility of the products or services Investors are moved by permissible (moral, sustainable,
2 Objectives sold to the market. Traditional finance opens the space for the so called “speculations”. green friendly) profits and by mutual growth.

Economy is based on the demand-offer law, where the demand is backed by the purchasing Economy is mainly based on the need of individuals, where
power. The result is a mismatch in resources allocation. the real economy represents the main economy and capital
3 Mechanism
(for both consumers and investors) is addressed to
“productive” expenditure, no waste.
Establish overall development and welfare, regardless the social and economical differences across Social cause-drives, it puts a main concern on poor people
4 Mission classes. Financial Darwinism is the only principle, excluding the socialistic governmental measures, or classes who have no access to basic human rights
allowing meritocracy. (education, food, happiness, health etc.).
Ultra centralized, nearly 100 corporates of ¾ countries control the global economy, in the name of Decentralized by nature, no centralized concentrations in
5 Governance “globalization”. the hands of few people. Wide dispersal of wealth and
properties.
More than 20% of people in the world live below the poverty level (they cannot afford two meals a If hybrid approach is followed and the core principles of
6 Issues day). Shari’ah are followed, there is potentially no problem.

25
 Introduction Web3 Economy Islamic Finance Methodologies

Current Monetary System

Credit Debt
• Set the max chargeable IRs Commercial Banks Real case
• Set guidelines for liquidity

Economy main forces

To reduce To increase To reduce

inflation inflation inflation
Interest rates 1 2 3
Spending grows, GDP Spending slows, GDP Spending grows, GDP Productivity Growth
Money printing expands contracts expands

Central Banks
To increase
inflation Business Cycle
6 5 4 (short-term cycle)
Taxes Depression (IRs are not Recession Spending slows, GDP 3-6 years
enough anymore) (breakdown point) contracts

Public Recover, after money printing, reddit

spending cut redistribution measures and public spending cut

7
Long-term cycle
Governments How Economies work – Debt life cycle 70-110 years

Stakeholder Tools Economy Drivers

26
 Introduction Web3 Economy Islamic Finance Methodologies

Islamic Monetary System

Purchase
with profit
margin
Debt
Commercial Banks Real case
• Set the max chargeable profit margins
• Set guidelines for liquidity
Economy main forces

Productivity To increase Productivity

grows inflation grows
Interest rates 1 2 3
Spending grows, GDP Spending slows, GDP Spending grows, GDP
Money printing expands contracts expands
(limited by real
value backing) Productivity Growth
Stabilizing
Central Banks growth
Productivity To increase
grows inflation
6 5 4
Zakath and
Sadaqa Spending slows, GDP
contracts
Business Cycle
Public And the cycle goes on (short-term cycle)
spending cut 3-6 years

7
Governments How Islamic Economies work – Debt life cycle

Stakeholder Tools Economy Drivers

27
4. Methodologies

30 Screening Process 40 Almeezan Group

31 Sharia’ah compliance screening methodologies list

32 AAOIFI

33 Dow Jones Islamic Market U.S. Index (DJIMI)

34 Standard & Poor's (S&P)

35 Morgan Stanley Capital International (MSCI)

36 Financial Times Stock Exchange (FTSE)

37 Thomson Reuters-Ideal Rating

38 ISRA-Bloomberg

39 STOXX Europe

Giorgio Torre
 Introduction Web3 Economy Islamic Finance Methodologies

List of methodologies

To measure the degree of adherence and compliance to the Shari’ah guidelines, international financial and regulatory institutions have provided guidelines to be followed by financial
intermediaries, governments and investors.

01 Accounting and Auditing for Islamic Financial Institutions (AAOIFI)

Screening process

02 Dow Jones Islamic Market U.S. Index (DJIMI)

Industry screening Assets screening Non-halal income
03 Standard & Poor's (S&P)
Pork/alcohol Debts

04 Morgan Stanley Capital International (MSCI) Gambling Cash

Conventional banks Investments

05 Financial Times Stock Exchange (FTSE)

06 Thomson Reuters-Ideal Rating

07 ISRA-Bloomberg

08 STOXX Europe

09 Almeezan Group

30
 Introduction Web3 Economy Islamic Finance Methodologies

Screening process

To measure a company’s involvement in impermissible secondary activities, its financial operations need to be scrutinized. Shariah screening methodologies include those
promulgated by the following institutions:

The company’s Its financial

Focus Area business domain operations

Screening step Sector and Activity Quantitative or Financial

• Ensuring that a company’s main assets are not predominantly cash or cash-
related to avoid to commit riba’ (interest). If that happens bay’ al-sarf
(currency exchange contract) rules should be observed. Similarly, a
From the list of prohibited industries, the company’s main assets should not be in the form of debts (receivables); If
first level of screening is to make sure that that happens bay’ al-dayn (debt trading contract) rules should be observed.
Approaches
the business is not involved in any of the
prohibited ones. • Ensuring that a company direct/indirect involvement in riba’-related
activities does not exceed the tolerable benchmarks. The riba’-related
activities can be in two forms: Investment in interest-based instruments;
and acquiring funds from the capital market or banking sector through
interest based facilities.

31
 Introduction Web3 Economy Islamic Finance Methodologies

AAOIFI

The AAOIFI was established in 1990 with the aim of preparing

accounting, auditing, governance, ethics and other Shariah Sector and Activity Screening Quantitative Screening
standards for the Islamic financial institutions. It plays a vital
role in harmonizing and standardizing the theoretical basis
and practices of Islamic financial institutions at a global level.
Its standards have gained acceptance across many Non-permissible activities: 1. Interest taking deposits less than
jurisdictions on either mandatory or recommended basis, 30% to market capitalization of total
• Pork Production equity;
including Saudi Arabia, Bahrain, UAE, Jordan, Lebanon, Qatar, • Non-Halal food products
Sudan and Syria (ISRA, 2016). Even in countries where they • Alcohol beverages 2. Interest bearing debt less than 30%
have not been fully adopted, like Malaysia and Pakistan, they • Gaming to market capitalization of the
are still heavily relied upon. Its standards also discuss Shariah • Interest-based financial institution corporation;
screening criteria for stocks. Due to the AAOIF’s worldwide • Entertainment
• Weapons 3. Total market value of illiquid assets
acceptance of its standards, its Shariah screening criterion is
• Tobacco more than 30% to market value of
crucially important for many index providers. Many stock
the total assets.
exchanges, like Oman, Maldives, Philippines, and institutions,
like Azzad, Alfa Bank have adopted AAOIFI’s Shariah screening
criteria for developing index or investing in stocks. The
standard was issued as of 20 May 2004. The standard stated
that investing in companies which have allowed purposes but
deal with interest and or other impermissible activities is not
permitted in principle but can be invested in their stocks as an
exception under specific conditions (AAOIFI, 2014).
32
 Introduction Web3 Economy Islamic Finance Methodologies

DJIMI

Dow Jones Islamic Market U.S. Index (DJIMI) is constructed by

screening out stocks that are incompatible with Islam’s Sector and Activity Screening Quantitative Screening
prohibition of interest and certain lines of business
(Shamsuddin, 2014). It is the first International Islamic Market
Index which was introduced based on Dow Jones Shariah
Board Fatwa issued in 1998. The Index was launched in Non-permissible activities: 1. The ratio of total debt to trailing 24-
February 1999. DJIMI was the world’s first global Shariah- month average market capitalization,
• Pork Production
compliant benchmark compliance concerns Muslim investors • Non-Halal food products
would otherwise face in constructing Islamic investment 2. The ratio of cash and interest-bearing
• Alcohol beverages securities to trailing 24-month
portfolios (S&P Dow Jones Indices LLC, 2018). The DJIMI • Gaming average market capitalization.
Shariah Supervisory Board has adopted a two-stage equity • Interest-based financial institution
screening process to develop the Dow Jones Islamic market • Entertainment 3. The ratio of accounts receivables to
• Weapons
indices (Dow Jones, 2013). At the first stage, a qualitative trailing 24-month average market
• Tobacco capitalization.
screening is conducted to exclude sectors whose core
business activities are deemed incompatible with the tenets
of Islam. t the second stage, a quantitative screening is
conducted to comply with the prohibition of riba or other
impure income.

33
 Introduction Web3 Economy Islamic Finance Methodologies

Standard & Poor's (S&P)

S&P Dow Jones Indices introduced S&P Shariah Indices in

2006 to meet the increasing demand for Shariah-compliant Sector and Activity Screening Quantitative Screening
stocks. The indices relied on Rating Intelligence Partners (RI)
to provide the Shariah screens and filter the stocks based on
these screens (S&P Dow Jones Indices, 2015). - For Shariah
screening process by S&P, each company’s latest financial Non-permissible activities: 1. Liquidity Ratios – less than 49% of
account receivable divide by 36
statement is reviewed to ensure that the company is not
• Pork Production month market average market
involved in any non-Shariah compliant activities, regardless of • Non-Halal food products capital and less than 33% of cash
whether the latest statement is a quarterly, semi-annual or • Alcohol beverages plus interest bearing securities
annual statement. If the latest statement is available in all • Gaming divide by 36 month average
three of these frequencies an annual statement will likely be • Interest-based financial institution market capital.
used, as these are more likely to be audited. Those that are • Entertainment
• Weapons 2. Debt Ratio – less than 33% of total
found to be non-compliant are screened out. After removing
• Tobacco debt divide by 36 month market
companies with non-compliant business activities, the average market capital.
remaining companies are examined for compliance with
certain financial ratios. Three areas of focus are leverage,
cash, and the share of revenues derived from non-compliant
activities.

34
 Introduction Web3 Economy Islamic Finance Methodologies

MSCI

Morgan Stanley Capital International World Islamic Indices

(MSCI) is an establishment of a global family of Islamic Sector and Activity Screening Quantitative Screening
indices, designed to reflect Shariah investment principles
while retaining replicability for international investors.
Importantly, the MSCI Global Islamic Indices will incorporate
dividend purification rules, resulting in a more relevant Non-permissible activities: 1. Total debt to total assets less than
33.33%.
benchmark for Shariah portfolios (Shanmugam & Zahari,
• Pork Production
2009). The MSCI Islamic Indices derived from the applicable • Non-Halal food products 2. Cash and interest bearing
MSCI Standard Indices, calculated according to the recently • Alcohol beverages securities to total assets less than
announced MSCI Global Investable Market Indices • Gaming 33.33%.
Methodology. Screening of both business activities and • Interest-based financial institution
financial ratios are used to apply the Shariah investment • Entertainment 3. Account receivables and cash to
• Weapons total assets less than 33.33%.
principles to the MSCI Global Islamic Indices. The indices were
• Tobacco
reviewed by MSCI Shariah advisors for ongoing compliance
with the MSCI Islamic Index Series Methodology. An
independent Shariah Board has issued a fatwa certifying MSCI
Islamic Index Series Methodology since March 2007 (MSCI,
2013).

35
 Introduction Web3 Economy Islamic Finance Methodologies

FTSE

Financial Times Stock Exchange Shariah Global Equity Index

Series (FTSE) was launched in October 1999. In response to Sector and Activity Screening Quantitative Screening
the rising demand for Shariah-compliant investment products,
FTSE has developed an enhanced suite of Shariah indexes that
use an improved methodology and produce a broader Shariah Up to 5% of revenue generated
index solution for Islamic investors. At present, there are 1. Total debt to total assets less than
permissible for the following haram
33.33%.
about eight main types of indexes under FTSE Shariah activities:
Indexes. 2. Cash and interest bearing
• Pork Production
securities to total assets less than
• Non-Halal food products
33.33%.
• Alcohol beverages
• Gaming
3. Sum of a company’s accounts
• Interest-based financial institution
receivable and cash over total
• Entertainment
assets is set at being less than
• Weapons
50%
• Tobacco

36
 Introduction Web3 Economy Islamic Finance Methodologies

Thomson Reuters

Thompson Reuters- IdealRatings has been providing Shariah

fund management services for financial institutions since Sector and Activity Screening Quantitative Screening
2006. Its Islamic indices are characterized by quarterly, where
research-based Shariah compliance screening performed by
IdealRatings accordance to AAOIFI (Accounting and Auditing Up to 5% of revenue generated 1. The ratio of total debt to trailing
Organization for Islamic Financial Institutions) adherent. The permissible for the following haram 12-month average market
indices are designed to serve as liquid, broad-based and activities: capitalization less than 30%;
comprehensive tools for investment professionals and
analysts to benchmark and invest in common stock on a local, • Pork Production 1. The ratio of cash, deposits and
• Non-Halal food products interest bearing investment
regional or global basis of Shariah compliant countries. The
• Alcohol beverages dividend to total assets less than
historical performance for Shariah Indices is available from 1st • Gaming 30%
April 2009. The indices currently cover 20 countries and • Interest-based financial institution
regions and three sectors, including countries with as few • Entertainment, Hotels, Music 2. The ratio of cash, deposits and
constituents as approximately 10 and as many as • Weapons receivables to total assets less
approximately several hundred. • Tobacco than 67%..

37
 Introduction Web3 Economy Islamic Finance Methodologies

ISRA-Bloomberg

Similar to other screening criteria, the ISRA-Bloomberg

screening methodology also has sector and activity-based Sector and Activity Screening Quantitative Screening
screening. After screening out the companies having
impermissible main business activities, it focuses on
companies with mixed activities. The sector and activity- Up to 5% of revenue generated 1. The ratio of total debt to trailing
based filter ensures that impermissible secondary activities of permissible for the following haram 24-month average market
companies are within a tolerable benchmark. This is captured activities: capitalization less than 30%;
by the income generated from such activities. Based on the
market norm and established custom, the criterion suggests • Pork Production 2. The ratio of cash place in
• Non-Halal food products conventional account to assets
that the income from such activities should not exceed five
• Alcohol beverages less than 30%.
per cent of the total income of a company, which is termed as • Gaming
revenue (Hashim et al., 2017). • Interest-based financial institution
• Entertainment, Hotels, Music
However, the unique element in the ISRA-Bloomberg • Weapons
methodology is that the platform highlights the degree of • Tobacco
Shariah non-compliant activities of companies. It does not
merely list them as Shariah-compliant companies. Company
A, for instance, may be listed as a Shariah-compliant company
with 4.7% of its income coming from Shariah noncompliant
activities.

38
 Introduction Web3 Economy Islamic Finance Methodologies

STOXX Europe

The STOXX Islamic indices are designed to provide broad

equity market exposure in compliance with Shariah principles Sector and Activity Screening Quantitative Screening
for Europe and the Eurozone. The index components are
selected by means of an advanced proprietary screening
technique. The screening process is monitored by the STOXX Up to 5% of revenue generated
European Islamic Index Shariah Supervisory Board. The STOXX permissible for the following haram
Islamic 50 indices are blue-chip indices designed to provide activities:
large-cap equity market exposure in compliance with Shariah 1. Non-Shariah compliant debt to
principles for the respect region. The Shariah Supervisory • Pork Production total assets less than 33%.
• Non-Halal food products
Board of STOXX Europe Islamic Index has issued its fatwa
• Alcohol beverages 2. Interest bearing assets to total
(opinion) defining stocks screening principles and guidelines • Gaming assets less than 33%
on 21 February 2011. • Interest-based financial institution
• Entertainment, Hotels, Music
• Weapons
• Tobacco

39
 Introduction Web3 Economy Islamic Finance Methodologies

Almeezan Group

As the largest private sector Asset Management and

Investment Advisory Firm operating in Pakistan, Almeezan Sector and Activity Screening Quantitative Screening
Group offers a comprehensive range of Shariah compliant
investment solutions. With an impressive track record of over
27 years, we cherish the status of being the only company in Up to 5% of revenue generated 1. Debt to Asset ratio should be less
Pakistan with the sole mandate to provide Shariah complaint permissible for the following haram than 37%.
investment solutions to their clients. activities:
2. The ratio of non compliant
• Pork Production investments to total assets should
• Non-Halal food products be less than 33%.
• Alcohol beverages
• Gaming 3. The ratio of non compliant income
• Interest-based financial institution to total revenue should be less
• Entertainment, Hotels, Music than 5%.
• Weapons
• Tobacco 4. The ratio of illiquid assets to total
assets should be at least 25%.

40
Shari’ah Compliance

42 The definition of Value

43 Representation of Value

44 Today’s Chain of Value

45 Value Layers

46 Web3 Shari’ah Analysis

47 Web3 and Islamic contracts

48 Web3 Products Compliance

Giorgio Torre
The Definition of Value

Value is something that individuals or group of individuals (i.e. businesses, nations etc.) can use as a mean or as a leverage to either obtain a good (i.e. food, materials, house, etc.)
or a service. In the early human history, the concept of “value” was intrinsically linked to the goods themselves (vegetables, eggs, ships, donkeys, fabrics, etc.), so that one could
exchange one good for another, in what is called the barter. In a nutshell, value was exchanged for another value. Later on, metals (for hunting and military use) and precious gems
(for adornments) entered to be part of the universally recognized goods. In particular, one started to associate higher value metals and precious gems based on the following 3
criteria:

Their adequateness to Their being free from Their scarcity (or their
fulfill their purpose in corrosion (i.e. gold) so rarity) on Earth: the
generating more value they do not alter their activities of searching for
(for military use, for nature and, perhaps, them would require
trade etc.) their intrinsic value. remarkable resources.

For the first time, now, goods and services could be exchanged with new set of goods, such as gold, silver, gems etc. However, transporting big values would necessarily mean to
transport big weights (kgs of precious materials) and this would also expose the value holders to risks of robbery and thieves.

42
Representation of Value

In a nutshell, this system was not practical and not secure. The solution came in 1407, in Genoa (Italy) Deposit Bank of San Giorgio and in 1472 with Monte Dei Paschi di Siena Bank
(oldest bank in the world today operating), also in Siena, Italy. These two are the first deposit bank of human history. The solution was simple: wealthy individuals could deposit
their wealth (gold, metals, gems, treasures etc.) in a trusted fortified underground cave, managed by this institution (later on called bank) which would have allowed the individual
to withdraw its wealth anytime. To ensure the identity and the rights of the value holders, these institutions issued to their depositing clients a specific document, called note of
bank, indicating the value of portions of value deposited. Some years later, these documents will start to be called bank-note. This became the first time, in the history of humanity,
where the value was traded between individuals (or group of individuals) though a representation of the value owned. For the first time, to be traded were good and services for a
representation of value (banknotes).

Value stored in a secure

place and replaced by
use of a representation
(note of bank)

Impractical and unsecure way to trade

Emission of note of bank

43
Today’s chain of value

World of speculation

Services
Surviving

Essential goods
Stock Market Digital Assets not tight
to a real value
Developm.

Conventional banking Any other activity

Raw materials Value representation (is lend money which dealing with non-
(money) does not exist) existing tangible
assets

Business
Leisure

If not traded, no value

Real Economy (backed by real value) Capital Economy (backed by money)

44
 Value layers

Our current economy is structured on layers upon layers of “virtual” economy, that do exist only in form of “promise”. Credit, debt, security and speculations are built on top of
the fundamental layers of the economy, where the trade of tangible and fungible assets occurs. If not backed by a real value, web3 products are placed at top of the speculation
pyramid.

Risk
Unbacked
Unbacked Web3 Economy
cryptos
Amount of speculation around economy layer

Financial
Amount of speculation around economy layer markets
Conventional Finance
Current monetary system
Amount of speculation around economy layer (money)

Services based on essential goods and

Amount of speculation around economy layer raw materials
Real Economy

Essential goods and raw materials

Value during
global crisis

Margin of risk considered by Islamic and Jewish Excess of risk or speculation, where sins
scholars as acceptable of Riba and Gharar are committed
45
Web3 Shari’ah Analysis

In addition to the overall investment portfolio review, all web3 investment products, assets and collectibles should go through the following screenings before Shariah compliance can
be determined

“O you who have believed, do not consume one another’s wealth unjustly
1 Anti-scam screening but only [in lawful] business by mutual consent.” (Quran 4:29)

Traditional screening measures such as Know your customer (KYC) and Anti-money Laundering (AML) can be applied to validate the identity of the
How is conducted
people behind the ICO. The introduction of such checks in the ICO process can help prevent fraud, scams and illegal financial transactions.

2 Business activity screening

Non-permissible activities: Pork Production , Non-Halal food products, Alcohol beverages, Gaming , Interest-based financial institution, Entertainment, Weapons, Tobacco.

3 Financials screening

See quantitative screening based on the main 10 Shari’ah screening methodologies (Chapter 4 of this deck).

4 Token screening
Further Shari’ah Checks
See next slide “Web3 and Islamic Contracts”. • Smart contract rules must be Shariah compliant
• Token distribution mechanisms must be Shariah compliant.
• Features and facilities of any exchange must be Shariah compliant

46
Web3 and Islamic contracts

In the Web2 Economy The equivalent in the Web3 Economy Corresponding Shari’ah contracts to comply with
Payments On-chain and cross- Hawaala and Salam contracts
Loans chain services Istisna and Murabaha contracts

Commercial Deposits Qard contract

Wallets (**)
Banking Escrow Shari’ah compliant escrow contract

Banking Other Crowdfunding

Activities Ijara and Istisna contract
F-NFTs (*)
Wealth &
Investment Lending Murabaha and Istisna contracts
Management Bay’ contract conditions
Staking Musharaka and Mudarabah contracts
must be met for all of
IPOs these products
ICO
process
Stocks
Derivatives
Securities Unaltered Bay’ contract
Bonds
Mutual Funds
Trading
Activities Gold
Commodities Unaltered
Other

FOREX CEX/DEX/HEX Salam and bay’ al sarf contracts

Insurance Mainly Unaltered Takaful contract

47
(*) For art, DeSCI, metaverse, asset tokenization and virtual real estate (* *) Custodial, non custodial, including DID and digital assets
Web3 Products Compliance
In addition to the Shari’ah compliance qualitative and quantitative screening, the following digital assets should be subject to the underlined considerations

Product Description Type Directly backed by real value Shari’ah Compliance

Compliant as long as the security is based

Security tokens are on-chain representations of traditional securities
Security Token (stocks, bonds, shares and ETFs) that exist off-chain.
Token No on halal instruments (based on the
described screening methodologies).
Representation of digital objects that provide the right to access or Compliant as do not intend to represent a
Utility Token utilize the value derived from it, for example, a service or Token Yes value, but rather ownership. Requested
subscription. only compliance to Bay contract.
Representation of digital objects that express the purpose of acting as Must respect Bay’ al-Sarf (contract of
Payment token a medium of exchange or unit of account and implemented at a Token
Only if backed by a basic good or
exchange of money for money) and be
(non cryptocurrency) material (i.e. gold-backed Stablecoins).
protocol level, for example, BTC, ETH. tight to a basic good.
For purely collection purpose, the
Non-fungible tokens (NFTs) are unique and non-interchangeable
compliance is ensured. For business
NFTs assets stored and transmissible on blockchain, and can represent Other Depends
purposes. It must be tight to an essential
digitally native items or physical items that exist in the real world.
good or first-necessity service.
Not compliant to the Shari’ah (as F-NFTs
Fractionalized NFTs, where depending on the specific model, owners
F-NFTs and holders can cash royalties for each sale in the secondary markets.
Investment Depends are by definition such in the secondary
markets).

Wallets and DeFI Only in the case of gold-backed Only in the case of gold-backed
Wallets are software that leverage cryptography Other stablecoins.
deposits stablecoins

Software allowing customers to trade cryptocurrencies or digital If fully decentralized and not involving into
any haram activity or any non-compliant
DEX/CEX/HEX currencies for other assets, such as conventional fiat money or other Other N/A
cryptocurrency, its is considered halal.
digital currencies.

Initial Coin An Initial Coin Offering (ICO) is a method of raising funds through the Depends on the adopted currency and Shari’ah compliant if 10 main conditions
Investment are met (see next slides)
Offering (ICO) use of cryptocurrencies. ICOs are basically blockchain crowd sales. on the respect of the Bay’ contract

48
Always consult with Islamic scholars or experts to evaluate the Shari’ah compliance of investment products
 Giorgio Torre

All rights are reserved. Every content part of this document, whether partial or total, aims to educate and does not replace an appropriate deep research. No profit has been generated out of it.
About the Author

Giorgio Torre has 10+ years of successful hands-on international experience in

Project Management, Business Making and Consulting. During his activity he has
been mentoring GCC and European Governments on their national startup
ecosystem development across several industries, while helping the business
environment to be fueled by the introduction and promotion of emerging
technologies such as Artificial Intelligence, Blockchain, Metaverse, VR/AR and
IoT.

Giorgio is an internationally recognized and awarded public speaker and author

of 50+ International publications on AI, Blockchain, Metaverse and Web3.

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https://www.linkedin.com/in/giorgiotorre1234/