In a world where crypto’s permissibility under Islamic law sparks fiery debates, Stellar (XLM) stands out with a rare distinction: it’s the first blockchain protocol to earn a Sharia compliance certification for payments and asset tokenization . But what does this mean for Muslim investors, and how does Stellar navigate the tightrope of ethical finance? Is Stellar Halal 100%? Let’s unpack the facts.
Table of Contents
The Halal Stamp: Stellar’s Sharia Certification Explained
In 2018, the Shariyah Review Bureau (SRB), a Bahrain-licensed authority, greenlit Stellar’s technology for use in Islamic finance after a rigorous audit . The certification covers:
- Cross-border payments compliant with anti-riba (interest) principles.
- Asset tokenization for ethical investments.
- Use of Lumens (XLM) in Sharia-aligned transactions.
This wasn’t just a checkbox exercise. The SRB’s 16-page report emphasized Stellar’s alignment with AAOIFI standards, a gold standard for Islamic finance . For institutions in Gulf states and Southeast Asia—where Sharia compliance is non-negotiable—this opened doors to adopt Stellar’s blockchain for remittances and microfinance .
Why Stellar’s Mission Matters in Islamic Finance
Stellar’s DNA is built on financial inclusion—a pillar of Islamic economics. Unlike speculative cryptos, XLM focuses on:
- Low-cost remittances: Average fees of $0.000047 per transaction .
- Bridging currencies: Enabling USD-to-peso transfers without traditional banks .
- Fighting poverty: Partnering with NGOs to bank the unbanked .
This utilitarian approach sidesteps gharar (excessive uncertainty) and maysir (gambling), key red flags in Sharia law. As Mufti Faraz Adam, a UK-based scholar, noted: “Stellar’s focus on real-world utility, not speculation, makes it a strong candidate for halal status” .
Stellar vs. Islamic Finance Principles: A Compliance Check
| Principle | Stellar’s Compliance | Source |
|---|---|---|
| No Riba (Interest) | XLM transactions avoid interest; fees fund network security, not profit-seeking. | |
| Transparency | Open-source code and auditable blockchain ensure trust. | |
| Ethical Use Cases | Used for remittances, microloans, and charity—not gambling or illicit trade. | |
| Asset Backing | Tokens like USDC on Stellar are 1:1 fiat-backed, reducing volatility risks. | |
| Community Governance | Collective asset distribution via voting aligns with Islamic risk-sharing models. |
The Gray Areas: Debates Among Scholars
Not everyone is convinced. Critics argue that crypto’s speculative nature inherently clashes with Sharia law. Stellar’s price volatility—down 90% from its 2018 peak—fuels this concern . However, proponents counter that XLM’s utility as a medium of exchange (not a speculative asset) mitigates this risk.
Blossom Finance, a Sharia-compliant investment firm, highlights Stellar’s “noble aim” but cautions that certification depends on how the technology is used—not the protocol itself . For instance, tokenizing alcohol stocks would violate compliance, even on Stellar’s network.
Real-World Impact: Stellar’s Halal Partnerships
Stellar’s certification isn’t theoretical. It’s actively reshaping finance in Muslim-majority regions:
- MoneyGram Integration: Enables instant USD-to-Mexican peso remittances for unbanked workers .
- Zakat Distribution: Charities use Stellar to transparently allocate funds via community voting .
- Gulf Banking: Bahrain’s ABC Bank uses Stellar for Sharia-compliant asset tokenization .
These use cases underscore XLM’s role in “making money move like email”—fast, cheap, and accessible .
Practical Steps for Muslim Investors
If you’re considering XLM:
- Verify Use Cases: Ensure tokens or projects built on Stellar avoid haram industries (e.g., gambling).
- Avoid Speculation: Treat XLM as a utility token, not a short-term trade.
- Monitor Partnerships: Follow updates from the Stellar Development Foundation for ethical collaborations.
For a deeper dive, explore the full Sharia report by Practical Islamic Finance.
The Final Word: Is Stellar Halal?
Stellar’s Sharia certification and focus on inclusion make it one of the most ethically sound cryptos for Muslim investors. While debates over volatility persist, its real-world utility and transparency set a benchmark in halal fintech. As Islamic finance evolves, Stellar’s blend of tech and ethics could redefine how blockchain serves faith-driven markets.
Still unsure? Compare Stellar with other halal cryptos in our guide to ethical investing.
Now that you have the answer, Is Stellar Halal? Check out other crypto currencies:
To answer the question “Is Stellar Halal?” we used these resources:
- Stellar’s Sharia Certification Announcement
- Shariyah Review Bureau
- Practical Islamic Finance’s XLM Report
Have questions about Stellar’s halal status? Share your thoughts below or join our newsletter for updates on ethical crypto investing.