Impact cryptos as a subset of social cryptos are the latest innovations in the field of fintech to gain Shariah compliance certification. Such cryptos are allocated to projects that make a measurable impact on the society both from the standpoint of the glorious Shariah as well as the UN-mandated SDGs. Introduced by IBF DigiLabs, the Singapore-based innovation lab of IBF Net Group, these have just been pronounced Shariah-compliant by Amanah Advisors, the UK-based Shariah Advisory firm. Social cryptos are a significant component of Confluence, the platform for measurement, rating and exchange of impact units, a project that recently won a place in the maiden cohort of FIKRA Accelerator program 2021 jointly offered by the Securities Commission (Malaysia) and the UN Capital Development Fund.
Confluence is IBF Net’s latest product that enables measurement of “impact” in the light of both the (17) United Nations Sustainable Development Goals and the objectives of Shariah and facilitates its transfer among parties by converting such “impact units” into social cryptos based on verifiable data. This has several strong merits over the conventional way of donating to or investing in impact-creating projects and waiting for the intended outcome. The use of social cryptos ensures that there is zero time-lag between donation/ investment and impact, since impact creation precedes the donation/ investment act. Furthermore, impact measurement tools are employed by a third party (Platform) with no incentive to overstate/ understate while project owners have little control over impact data generation. Social cryptos also provide divisibility and granularity to impact assets. Donor/investor can easily change the nature of his/her footprints across various sectors and design his/her preferred portfolio of impact-donations or impact-investments.
The Shariah approval accorded to this innovative solution by Amanah Advisors (UK) is based on careful scrutiny of the project documents, the mechanism document and the process flow document. The issue of a certificate of compliance is along expected lines from this firm with highly competent Shariah scholars led by Mufti Faraz Adam and coincides with the launch of UN Climate Change Conference (COP26) in the UK, says Mohammed Alim, CEO.
“The social cryptos operate under the Shariah concept of Hiba bil Shart (conditional granting) where social cryptos are credited to a donor’s wallet upon the successful presentation of an impact report by a donor after donating to a third-party charitable project.” says Mufti Faraz Adam of Amanah Advisors.
Confluence is an important component of the larger project of the IBF Net Group to transform the Network into a miniature Islamic economy by developing smart contracts and use cases for its philanthropy, not-for-profit and for-profit sectors. Getting a Shariah Compliance certificate further strengthens IBF Net’s position in the Islamic FinTech space.
Amanah Advisors is an independent, globally recognised Shariah advisory firm. Amanah is dedicated to offering wholesome end-to-end Shariah-compliant solutions by leveraging on its experience, global connections and expertise in the field.