Shariah-compliant framework recommended for blockchain, AI applications

The 11th Doha Islamic Finance Conference has recommended the development of a Shariah-compliant regulatory framework for blockchain and artificial intelligence (AI) applications. The conference, held in Qatar, called on Islamic financial institutions, regulatory bodies, and tech experts to collaborate to standardise smart contracts, govern AI, create sandbox environments for blockchain/AI testing, and establish balanced frameworks […]

The 11th Doha Islamic Finance Conference has recommended the development of a Shariah-compliant regulatory framework for blockchain and artificial intelligence (AI) applications.

The conference, held in Qatar, called on Islamic financial institutions, regulatory bodies, and tech experts to collaborate to standardise smart contracts, govern AI, create sandbox environments for blockchain/AI testing, and establish balanced frameworks that encourage innovation while upholding Islamic principles.

The conference’s closing statement stressed the need to accelerate the study, assessment and monitoring of evolving risk factors in decentralised finance (DeFi).

This involves evaluating their alignment (or divergence) with bridging the existing gap between innovation on one hand and values and regulations on the other.

It reaffirmed that the essence of Islamic finance is founded in its value-based and ethical framework.

The Islamic financial system strikes a balance between innovation, ethics and regulation — building a fairer, more Shariah-compliant, and sustainable model. This applies equally to centralised, decentralised, or hybrid finance.

The statement emphasised that electronic games cannot be subjected to a single juristic ruling (hukm), as they vary in nature, aspects and dimensions. Their rulings are subject to Shariah-based guidelines that aim to achieve legitimate benefits (masālih) of play and entertainment while minimising the harms (mafāsid) associated with these games.

The statement also underscored that the study of futuristic jurisprudence (fiqh al mustaqbaliyyāt) holds significant importance in contemporary juristic reasoning and fatwa production.

Given the cognitive foundations of juristic reasoning when examining outcomes (ma’ālāt) and the nature of AI — particularly its ability to analyse big data, derive rulings, and draw conclusions — AI can be employed to enhance the effectiveness and precision of forecasting future juristic choices and outcomes.

 

Moreover, it highlighted that the integration of blockchain and AI strengthens Shariah compliance in Islamic banking by promoting transparency, improving Shariah auditing, and mitigating the risks of manipulation.

 

Practical applications in some Islamic financial institutions have demonstrated the success of this integration, paving the way for Islamic banks to enhance their performance, increase efficiency, and develop innovative products — ultimately boosting their role and competitiveness in the global financial industry. (The Peninsula)