German FinTech to launch Sharia-compliant cryptocurrency and blockchain

Caiz Development is building digital token Caizcoin to promote financial inclusion in developing countries

Caizcoin is an ethics-based cryptocurrency, which will conform to the principles of Islamic financial laws. Photo: Caiz Development

German FinTech company Caiz Development is building a Sharia-compliant cryptocurrency and blockchain designed to unlock financial opportunities for millions of underbanked people in developing countries.

Caizcoin will conform to the principles of Islamic finance. The blockchain will also offer transactions that follow the rules of Sharia.

“In 2018 to 2019, we got the idea of building a cryptocurrency that can be used in the Islamic world under all its restrictions, such as no interest, knowing your counterparties, no anonymity or speculation,” said Joerg Hansen, chief executive of Caiz Development.

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“We conferred with Islamic scholars whether this is permissible before we decided to design the token. We made the best efforts to make Caiz Islamic-compliant, but we also wanted to build an inclusive product that can be used by everyone.”

The Mena region is the fastest-growing cryptocurrency market in the world, accounting for 9.2 per cent of global digital currency transactions from July 2021 to June 2022, according to a report this month by blockchain data platform Chainalysis.

About 22 per cent of the GCC's population is unbanked, compared with 60 per cent in North Africa, according to a report by consultancy Strategy &.

Seventy-nine per cent of young adults in the Mena region are unbanked and 72 per cent of the poorest citizens can benefit from financial inclusion, according to the Arab Monetary Fund.

The FinTech identified remittance payments as one of the biggest pain points for migrant communities, not only in the Islamic world, but also globally.

“The strongest use cases for Caizcoin aren’t in the US or Europe, where everyone has a bank account. Instead, they are unbanked and underbanked users in developing countries where there is less penetration of financial services,” Mr Hansen said.

“They can download the app, buy Caiz and send it to a recipient, who can use it within our ecosystem for different purposes or cash it into a local currency.”

The company’s biggest markets are in South-East Asia, the Middle East and Africa, as well as migrants in Europe and Latin America.

Cryptocurrencies are typically available on decentralised exchanges, where users deal with unknown counterparties and unknown risks.

However, Caizcoin will operate in an ecosystem where there will be “checks and balances” for all wallet holders. Only someone who has been vetted and checked can enter the system, said Mr Hansen.

With its “know your customer” principle, Caizcoin does not support partnerships with industries prohibited in Islam, such as alcohol, drugs, gambling and pornography.

The company, which currently has a marketing office in the UAE, is also building the token on a customised blockchain.

“We are not building a coin on top of Ethereum, for instance. We forked an underlying technology, Stellar chain, in a way that we can build this from the ground up,” Mr Hansen said.

The founders of Caizcoin will also engage in charitable activities and champion social causes. For instance, Caiz Development recently sponsored the Euro sculpture in Frankfurt, Germany.

The FinTech company is also planning to build football academies for children in Singapore, Malaysia and Indonesia.

Caiz Development will set up its custom-designed blockchain and application programming interface to connect it with financial service providers, banks and payment gateways in the first quarter of 2023.

“We will have a Caiz wallet and an app so that people can access the ecosystem without a bank account, and purely from their mobile phone,” Mr Hansen said.

Caizcoin is still at the fund-raising stage.

“Even though we have done private sales, we will be launching trading on many exchanges to widen the fund-raise for further expansion of the coin this year,” Mr Hansen said.

“This will still be on the Ethereum chain and we will switch to Stellar blockchain in January or February.”

Currently, Caizcoin is available on five exchanges, including P2Pb2b, BigOne, Biconomy and Bittrex.

“Anyone who already has Caiz from the pre-sale can deposit the coins there. Once the market conditions stabilise, we will enable access to people on the exchanges,” said Mr Hansen.

The company will approach one or two top-tier exchanges either this year or the next, he said.

The developer is also set to launch an Islamic-friendly alternative to staking in a few weeks in partnership with an exchange.

Staking is a way to generate passive income while waiting for cryptocurrency assets to increase in value.

Staked coins are similar to interest-bearing savings accounts or bonds as they all provide interest income on an initial investment.