As the Bitcoin and ETH price charts prove, the crypto market has been under a bearish influence since 2022 when the value of all major crypto assets entered a prolonged period of decline. And yet Bitcoin, Ethereum and the likes continue to forge ahead in their quest for mainstream adoption. While the effects of the latest crypto winter are impossible to refute, as evidenced by the price charts, it seems that digital assets haven’t lost their shine.
This is proven by the increasing number of countries that have embraced crypto coins with open arms over the past few years and display an overall crypto-friendly attitude, with Australia, the United States, Brazil, The United Arab Emirates, Hong Kong, Canada and Singapore topping the list, according to a study by HedgewithCrypto.
More recently, the Sultanate of Oman has joined the ever-expanding cohort of nations ramping up their crypto integration efforts by making a series of multimillion-dollar investments in crypto mining operations. The move is meant to establish Oman as a digital hub in the Middle East, a region that has emerged as a major player in the crypto space in recent years.
Oman is laying the foundation for a thriving crypto environment
The pearl of Arabia, as it is often dubbed, Oman is a relatively small West Asian nation located in the far southeastern part of the Arab Peninsula. This past month, the Omani government publicly announced plans to invest a total of nearly $800 million in crypto-mining operations.
More specifically, on the 23rd of August, Oman disclosed they struck a $300 million partnership with leading engineering firm Phoenix Group in Abu Dhabi. The plan is to build a 150-megawatt crypto-mining facility with the support of Green Data City, the first certified crypto-mining organization in the country. The project will most likely be completed and ready to operate next year. Prior to the partnership, the country’s capital, Muscat, approved a similar project for a $370 million farm managed by Exahertz International, a local Omani company. The facility is expected to put into service 15,000 more machines by October
Given its geographical position, the news that Oman is making strides towards greater crypto adoption comes as no surprise. The entire Middle Eastern region has shown a keen interest in crypto assets over the past years, making consistent efforts to support the growth of the local digital economy and expand its presence in the DeFi market. This means that the Sultanate of Oman is just one in a long list of Middle Eastern countries that have become aware of the huge potential held by digital assets and therefore embraced a pro-crypto approach.
The United Arab Emirates provides the most eloquent example in this respect, having one of the most crypto-friendly jurisdictions in the world. The favorable crypto policies established by the UAE have prompted many global crypto companies to set up shop in the country. This move has inspired other countries in the region, including Oman, to adopt a similar strategy and throw open the doors to digital assets.
Debates over Sharia compliance
While investing in crypto is far from being an unusual endeavor these days, even at state level, it remains an issue up for debate in Muslim-majority countries. With cryptocurrency becoming increasingly popular across the Middle East, questions around whether or not crypto-related activities are Sharia-compliant have started to arise.
Many countries in the Muslim world apply Sharia law across all aspects of life, including family, marriage, inheritance, banking and finance. Sharia is a religious code for living derived from two sources: the Quran, Islam’s holy book, and Sunnah and Hadith, the sayings and teachings of the Prophet Muhammad. Therefore, it comprises a wide collection of rules and principles that guide Muslims in their day-to-day life, helping them distinguish between haram (actions or behaviors that are forbidden or unlawful) and halal (things that are allowed or lawful).
So, crypto’s compliance with Sharia law is a question of morality, not one of profitability. There’s no denying that digital assets provide the potential for high returns and offer numerous other advantages to users. However, it’s not yet clear if dabbling in crypto falls in line with Islamic principles and guidelines around finance.
Some Islamic scholars argue that crypto’s high price volatility and speculative nature reminding of gambling activities make these assets and all acts related to them haram. These arguments have prompted Islamic groups in several Muslim-majority countries like Turkey, Egypt or Indonesia to issue fatwas – official rulings given by a qualified scholar of Islamic law on important matters that are brought into question.
On the other hand, many suggest that crypto is halal given the lack of interest rates as well as its widespread usage. Considering that digital assets are a new entry in the financial system, there are many nuances that need to be taken into consideration and storied in order to determine if they comply with Islamic law or not, so the debates on the issue are bound to continue for the time being.
Meanwhile, Muslim countries in the Middle East and North Africa continue to push forward towards wider crypto acceptance, as reflected by a 2022 study from Chainalysis. According to the reports’ findings, four out of the top twenty countries with high crypto adoption rates are Muslim-majority nations. Moreover, countries with large Muslim populations also seem to rank high on the list.
At the moment, crypto regulatory standards in the Muslim world are rather fragmented and inconsistent. While some countries like the United Arab Emirates and Oman are going above and beyond to boost their appeal as digital hubs for crypto companies, other nations like Turkey place strict regulations on the use of digital currencies on their territory.
Final thoughts
There’s no denying that crypto’s popularity in the Middle East and the Muslim world at large has increased considerably over the past few years. However, questions regarding Sharia compliance still pose a serious issue for adherents of Islam, leading to conflicting views and attitudes on the matter. Hopefully, these issues will settle as the crypto industry advances on a route to maturity.
