Bored Gen DMCC, the developer entity of Islamic Coin, has been issued an enforcement notice by the Virtual Assets Regulatory Authority in Dubai for technical non-compliance. How will this affect the future of the Shariah-compliant cryptocurrency?
Islamic Coin (ISLM), a cryptocurrency that aims to onboard over 1.8 billion Muslims into digital finance without compromising their values and faith, has encountered regulatory challenges in Dubai, one of its key markets.
The Virtual Assets Regulatory Authority (VARA), the regulator of digital assets in the UAE, has issued an enforcement notice to Bored Gen DMCC (BG), the entity associated with Islamic Coin, for failing to secure necessary approvals for the issuance and distribution of ISLM in Dubai.
VARA’s Investigation and Enforcement Notice
VARA’s investigation, which began in October 2023, focused on issuing and distributing ISLM, the native currency of the Haqq Network, a scalable and interoperable blockchain built on Proof-of-Stake with fast finality and ethical finance principles.
According to VARA, BG did not obtain the required licenses and permissions from VARA and other relevant authorities before launching ISLM in Dubai. VARA also found that BG did not comply with the disclosure and reporting obligations under the Virtual Assets Regulatory Framework.
As a result, VARA issued an enforcement notice to BG on November 16, 2023, stating that BG must cease all activities related to ISLM in Dubai and refrain from offering or promoting ISLM to any person in Dubai.
The regulator also ordered BG to remove all references to ISLM from its website and social media platforms.
However, VARA also acknowledged that BG had undertaken significant remedial actions, such as implementing enhanced public disclosures, to increase market transparency and confidence.
Dubai’s VARA also stated that BG may continue its operations unrelated to virtual assets, provided that it maintains regular engagement with VARA and adheres to all regulatory requirements.
BG’s Response and Clarification
In response to VARA’s enforcement notice, BG released a statement on November 17, 2023, clarifying its role in relation to ISLM.
BG claimed that it is not the issuer of ISLM but rather a “developer entity” responsible for developing key components of the Haqq Network, such as the Haqq Wallet and Launchpad.
The entity also highlighted that the public sale of ISLM occurred on the Republic platform, a U.S.-regulated entity that adheres to specific regulations (Reg D and S) for U.S. and international investors.
BG further stated that it did not conduct any direct or indirect marketing or distribution of ISLM in Dubai or any other jurisdiction.
BG expressed its respect for VARA’s authority and willingness to cooperate with VARA and other regulators to resolve outstanding issues and reaffirmed its commitment to developing and promoting ethical and Shariah-compliant financial products and services for the Muslim community.
The Future of Islamic Coin
Islamic Coin, which launched on KuCoin, a leading cryptocurrency exchange, on October 12, 2023, has attracted the attention of many investors and enthusiasts as a pioneering project in the field of Islamic finance and blockchain.
ISLM aims to provide a range of Shariah-compliant products and services, such as interest-free investments, halal trading, and charitable giving.
However, the regulatory hurdles BG faces in Dubai may pose some challenges for the growth and adoption of ISLM in the region and beyond.
Dubai is a major financial hub in the Middle East and a potential market for ISLM and other Islamic finance products. VARA’s enforcement notice may deter some investors and users from engaging with ISLM, as well as create uncertainty and confusion among the existing ISLM holders.
On the other hand, BG’s remedial actions and clarification may help to restore some confidence and trust in ISLM and the Haqq Network.
BG’s cooperation with VARA and other regulators may also pave the way for a more conducive and supportive regulatory environment for ISLM and other ethical and Shariah-compliant digital assets in the future.
