Is Marhaba (MRHB) Halal? Does it matter? A Muslim's Perspective

By mekhiMKL | The Layperson's Crypto | 22 Nov 2021

What is Halal Finance (Also Known as Islamic Finance)?

Within the Quran, the message given to the Prophet Muhammad by God, there are instructions regarding most, if not all aspects of how a Muslim, one who submits or surrenders to the authority of God, should live. Various actions are plotted along a spectrum of required, preferable, suggested, permissable (Halal), discouraged, recommended against, and impermissible/forbidden (Haram). Halal is an inclusive term that can include everything that isn't Haram.

Impermissible behavior includes oppression and injustice, particularly, but not limited to Riba, collecting interest on loaned capital from those who are less fortunate in a way that creates, causes, or exacerbates hardship. By extension, any financial activity that upholds injustice or oppression is not halal. Even though it's not expressly stated, many, though not all Muslims feels this extends to profiting off of pork, which we are forbidden to eat per the Quran, and the sale of alcohol, the use of which is discouraged by the Quran (though some Muslims argue that it should be considered forbidden and do not partake). Sex trafficking is also expressly forbidden by the Quran, as is killing in any circumstance beyond self-defense. Likewise financial activities that generate profit from these evils and enable such actions wouldn't be considered Halal. 

Why does it matter?

Many utilizers of DeFi crave transparency, accountability, and greater control of their investments. Halal Finance can be seen as part of that movement. Many people want to know exactly what they are putting their funds into, and to make informed choices about how their funds will be used. Many investors have moral and ethical concerns about the impact of their investments on the world. Halal Finance offers one way for anyone to gain such clarity. 

It also provides more opportunities for DeFi entrepreneurs to gain exposure to a new and largely untapped market. And, inversely, for new innovation and ideas to be generated through that collaboration from users who have, thus far not been included. 

Controversies Regarding Halal Finance

Halal and Haram are often treated as dichotomous absolutes by some contemporary extremest sects (e.g. Wahabists, Neo-Salafists, etc) and there has been growing pressure due to the increasing geo-political power of these sects to cater to their beliefs, even if they contradict the Quran. These groups tend to create legal rulings (fatwas) in which an ever expanding list of items are declared Haram, even though an Orthodox Muslim perspective would recognize this runs afoul of the Quran's prohibition to forbid anything that God has not forbidden. As such, the most extreme, and untraditional stance is often privileged. These sects also tend to discourage critical thinking and study of the Quran and try to shift the individual's reliance on God and his message to reliance upon earthly "authorities". This causes conflation between Shariah (laws outline by God in the Quran), and Fiqh, the attempt by humans to study and implement laws inline with Shariah. Many of the extreme, violent, and unethical examples of "Shariah" in the media represent this kind of jurisprudential overreach where humans conflate their own bigoted ideals with the law of justice, peace, and liberation set forward by God in the Quran.

Contrastingly, there is a movement within Islamophobic tendencies against the proliferation of Halal products (typically food but can, and sometimes does extend to other categories) within Western societies. This is often tied to conspiracy theories that are rooted in fear, hatred, and fundamental (sometimes willful) misunderstandings about Islam, which is simply a path/process of submitting to God which focuses on belief and righteous action.

The real objection, of course, is against the increasing visibility of Islam and Muslims, and increasing economic and consumer power of Muslims in the West, which is what the increased availability of Halal products represents to those who fear cultural plurality and religious freedom. 

Both of these tendencies have the potential to create obstacles for Marhaba - though I'd argue the former is more pressing than the latter, though it's always possible that some European countries may try to outlaw Halal Finance and cause geographic restrictions.

Is Marhaba Halal?

In my cursory examination of Marhaba's website and investor documents I found two divergent visions of what Halal Finance is and what Marhaba's future is within that framework. They are best exemplified by the "Green" and White Papers. 

My initial concern was whether Marhaba represented a truly Islamic approach to DeFi or if it was mere "green washing" - a superficial attempt to appeal to the Muslim market without any substantive difference. Reading the "Green Paper" (a title which made me physically wince) was quite frustrating. The document is peppered with many useful illustrations of shariah law from quotes taken from the Quran and Hadith, but these ideals were not well tied into the body of the document, and other assertions made about what is considered "Halal" and "Haram" in finance or other respects was not well supported by these quotations (or any evidence, whatsoever). Sadly, the focus on Halal Defi (and Shariah law as a whole) as a pro-social, ethical approach which forbids exploitation and encourages acts of service never makes it into the body of the document, which is largely superficial and meandering. The actual text never concerns itself with how MRHA is going to promote the social good, or reduce exploitation or oppression. Instead it primarily concerns itself with bizarre examples and unnecessary explanations and definitions of crypto-specific terms and concepts, with only the thinnest gloss of anything remotely Muslim. Again and again, its posited that basically anything is Halal (allowed) unless it is tied to something that is expressly Haram (forbidden) - a point which needed only one sentence of explanation. Instead, every type of currency is listed and again and again the same argument is made, if anything Shariah related is mentioned at all. This continues for about 14 pages, about half the document, and it gives the distinct impression that the authors do not believe that Muslims have a strong understanding of cryptocurrency. The basics of what is forbidden in finance is mentioned in the beginning, but never revisited. 

The next quarter of the document is devoted to described the Shariah Governance Board, it's function, process, and involvement in the larger process. 

The remainder of the paper aims to detail the shariah underpinnings of the products offered by MRHB. Decentralized Philanthropy is the one truly innovative, Islamic product described. It addresses the lack of transparency in typical zakat distribution.  

However, the white paper outlines the real foundations of Halal/Islamic Finance, and a much different, and preferable, roadmap for the collective products it is offering. Whereas in the "green paper" the Shariah Governance Board and overall centralized, minority governance in general is treated as a constant, the white paper treats it as a bridge to a communal governance more in-line with orthodox Islam as set forth by the Quran. In the Quran, individuals are encouraged again and again to use critical thinking in study of the Quran to best understand what God wants from them, rather than relying on others interpretation. Through this process we further test, or develop our faith. A platform which emphasizes consensus of individual judgement best exemplifies what is set forth I'm the Quran. The idea of a group of three people substituting their own judgement for others impairs the ability of Muslims to develop judgement and critical thinking, encourages complacency rather than critical study, and prevents further development of faith. Muslims need to have opportunities to discern right from wrong, it's essential for our spiritual growth. There are some totalitarian sects, who are preoccupied with political rather than spiritual matters, who would rather see Muslims submit to human authority in this respect, and I wonder if how the green paper presents governance is influenced by the desire to appeal to these groups.

The green paper, and the white paper, are like night and day. The quality of writing of the latter is much improved on the former, as is the depth and nuance of the explanation (and seemingly, understanding) of Islamic Finance. These differences are concerning. A consistent, clear vision, inspired by the Quran and informed by well-substantiated Sunnah (Hadiths about the actions of the Prophet Muhammad) needs to be established. I don't like the uncertainty that two different public visions presents, and I may wait until there is more coherence in their public materials before investing. 

I do see some of their activities this far to be encouraging - especially as regards ecological concerns, and will be keeping a close eye on this platform.

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