Mogadishu (AX) — Somalia’s banking industry, worth a cool $2 billion, is gearing up for some serious expansion. This growth spurt is fueled by new rules and a rising wave of interest in fintech. But there’s a hitch with bringing cryptocurrencies into the mix, as the sector grapples with syncing up international financial norms and Islamic banking values.
While people are starting to buzz about cryptocurrency in Somalia, the chatter is still pretty nascent. Local banks are dipping their toes into figuring out how to weave this cutting-edge tech into their financial tapestry. The real head-scratcher is meshing the unpredictable, decentralized world of cryptocurrencies with the steady principles of Islamic finance, which gives the boot to interest (riba), gambling-like speculation (gharar), and dicey uncertainty (maysir). Experts are nudging for laws that guarantee compliance with Sharia, to build customer confidence and push fintech forward.
Asset-backed cryptocurrencies, like OneGram, might just bridge the gap, fitting the bill for Sharia acceptance.
The potential for crypto to enhance financial inclusion is hefty. A lot of folks in Somalia rely on barter and money sent home, amounting to a hefty $1.5 billion to $2 billion each year. Cryptos could trim transaction costs and hurry up international payments, making financial dealings more affordable and reachable.
Throughout the Muslim world, there’s a clamor for financial services that mesh with Sharia rules. If digital offerings, like cryptocurrencies, don’t show clear Islamic law compliance, they might not catch on.
A lack of clear regulations is tangling up Somalia’s efforts to bring cryptocurrencies onboard. After years of chaos, the financial sector stands without solid guidelines for digital currencies. This vacuum stirs worries over adhering to global anti-money laundering (AML) and counter-financing of terrorism (CFT) standards, vital to keeping financial operations above board.
Somalia desperately needs a tech boost to handle blockchain with kid gloves. Even though digital options like mobile banking have taken off, the existing systems need a serious upgrade to tackle the complex demands of cryptocurrency. Without these tech boosts, the risk of funny business or fraud might put the brakes on crypto adoption.
Edited by: Ali Musa
Axadle international–Monitoring
