Russian Muslims can't be engaging in certain financial activities

On March 29th, the Spiritual Administration of Muslims of the Russian Federation issued a guide for Muslims on what types of financial activities are prohibited. This document (available in Russian language) prescribes a strict ban on short sales (shorts) and margin trading. The document also explains the ban on purchase shares of companies engaged in the production of alcohol, pig farming and gambling.

To understand why such financial activity is forbidden for Muslims, let's understand the basic concepts and terminology.

Investment Rules in accordance with Shariah law
Muslim investors must follow Shariah rules when investing. They prohibit them from participating in futures transactions, trading stocks for rent or entering into fixed-term contracts. However, they are allowed to participate in spot trades and open long positions on stocks. A spot contract is a special type of transaction that is made immediately, unlike a fixed-term contract that is concluded and executed later.

Transactions permitted by Shariah
Shariah laws prohibit certain types of activities, such as: alcohol production, pig farming and gambling. Therefore, only securities issued by companies that are not involved in these types of activities and do not raise funds by receiving interest from their activities can be used for authorized transactions. Examples of such companies are clothing manufacturers and telecom operators.

Rules for the acquisition of shares of companies engaged in permitted activities, but raising funds at interest
Companies engaged in permitted activities and raising funds at interest must meet certain conditions:
1. The charter of the company should not assume that among its goals there are usurious transactions or transactions with prohibited products.
2. The share of funds raised through interest-bearing loans (including preferred shares, leasing contracts and derivatives) should not exceed 30% of the total capital or market capitalization of the company.

Interest-bearing deposits are prohibited
Interest-bearing deposits, including investments in companies involved in activities contrary to the laws of Islam and derivative investments, should not exceed 30% of the total capital of the company. Profit received from activities contrary to Islamic law should not exceed 50% of the total income of the company, regardless of whether this money is received from prohibited activities or from the possession of prohibited property or rights.

Recommendations of the Ulema Council of the Russian Federation
The Ulema Council of the Russian Federation strongly recommends that Muslim investors close any positions related to companies that do not adhere to Sharia law. In addition, any profit received from such activities should be donated to charity.
Halal investment is a form of investment that complies with the norms of Islamic law. The DOOM of the Russian Federation advises Muslims who want to invest to consult with qualified Islamic traders to verify the legality of the proposed investments.
In October 2021, the Moscow Exchange, in cooperation with Sberbank, began calculating Islamic investment indices (mxshar, mxshartr). Indexes consist of stocks of companies that adhere to the precepts and postulates of Islam. Since the beginning of 2023, the mxshar index has registered an impressive 10.5%.

Digital investments
We live in the era of digitalization, when digital assets are replacing traditional paper assets. Technology makes it easier than ever to access information and expand the ways to communicate with other people. More and more companies are using the Internet to improve their work. Thanks to the improved speed and transparency of data access, digital finance and investment are becoming an increasingly popular way of investing and making a profit.

IslamicCoin is a digital currency conforming to the norms of Islam and Shariah, functioning in its own blockchain Haqq, which means "Truth". Already at the stage of closed sales, IslamicCoin aroused huge investor interest and was able to raise more than $ 200 million in just a few weeks. Unlike technically outdated Bitcoin and Ethereum, which have a lot of problems, IslamicCoin uses the full power of the most progressive blockchain technologies and is based on the most fair and reliable ideology and rules of conduct.

Successful investors choose ideology, technology and prospects based on something more than minor fluctuations in price charts. For almost 20 years of the existence of a new type of digital money, cryptocurrencies have not brought a drop of real value into this world, have not made people free, independent and happy.

And this means that it's time for a new type of finance based on responsible choices and new values!