Amid Sharia Law Uncertainties, Oman Pours Millions into the Crypto Sector

Updated: 28 August 2023

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This month saw the government of Oman, situated on the Arabian Peninsula’s southeastern edge, significantly expand its involvement in the world of digital currencies. This move comes as part of Oman’s broader ambition to be a key digital player in the West Asian region, which is getting increasingly competitive.

On the 23rd of August, a $300 million partnership was announced between Oman’s first certified crypto-mining firm, Green Data City, and the Phoenix Group based in Abu Dhabi. They aim to kick off a 150-megawatt crypto-mining operation next year. This follows another notable venture where the government of Muscat okayed a $370 million crypto-mining farm managed by Exahertz International. The farm is slated to add 15,000 more machines by October, a local news outlet reported.

A major milestone that would help accelerate the growth of the financial sector

The Minister of Transport, Communications and Information Technology in Oman, Said Hamoud al-Maawali, stated that these investments are a “major milestone” that would “help accelerate the growth” of the nation’s digital financial sector.

Interestingly, this intensified interest in cryptocurrency from Oman arrives at a time when there’s an ongoing debate in the Islamic world about whether digital currencies align with Islamic law, often referred to as sharia. According to sharia law, there are guidelines that dictate the moral permissibility, or halal, and impermissibility, or haram, of financial activities. Some Islamic scholars argue that cryptocurrency’s often speculative attributes make it haram. This stance has led to the issuance of fatwas, or Islamic legal decisions, from notable Islamic communities in countries like Turkey, Indonesia, and Egypt.

Yet, an alternate perspective exists within Islamic legal thought. Some argue that owning digital currencies like Bitcoin doesn’t involve interest, or riba, making it potentially halal. The growing global acceptance of cryptocurrencies is also cited to bolster the case for them being considered halal.

Middle East and North Africa, the Most Rapidly Expanding Markets for Crypto

Even as Islamic scholars remain divided, nations with Muslim-majority populations have been keenly adopting digital currencies. As per a report by Chainalysis from October 2022, the Middle East and North Africa, largely Muslim-majority regions, were the most rapidly expanding markets for crypto in that year. In the Chainalysis Crypto Adoption Index, four Muslim-majority countries ranked among the top 20 adopters, and were accompanied by countries like India and Nigeria with significant Muslim communities.

Lastly, it’s worth noting that the Muslim world’s regulatory attitude toward cryptocurrencies is a mixed bag. The United Arab Emirates, for instance, is at the forefront of crypto-friendly regulation. In contrast, Turkey allows for the trading of cryptocurrencies but prohibits their use for payments and by financial middlemen.

In summary, Oman’s massive investment in the crypto industry indicates its ambition to be a digital economy leader, even as questions about the sharia-compliance of such investments continue to be debated.