Is Ripple Halal: Is XRP Halal?

In this article we do a complete Shariah screening of Ripple to answer is XRP halal or haram. The short answer is yes, Muslims may trade and invest in XRP, but have a read and see if you are comfortable with our assessment first.

What is Ripple?

Ripple has aimed to increase the speed of transactions and decrease fees paid by financial institutions through the use of XRP, a cryptocurrency, as a foundation for xRapid, a platform for on-demand liquidity. Ripple’s XRP cryptocurrency underlies Ripple’s xRapid on-demand liquidity solution.

Ripple launched XRP, a cryptocurrency native to the Ripple Consensus Ledger, in 2013, although some of its history traces back to 2004 with RipplePay.

Initially, it released 100 billion XRP tokens. Of that total, 80 billion were allotted to Ripple, and 20 billion went to the three founders of the company. During 2013, Ripple raised more than $7.5 million from some of the most distinguished venture firms in the united states.

Ripple focused its efforts on bringing financial institutions to the Ripple network, helping scale payments by facilitating the collection and processing of cross-border transactions. Ripple’s entrance into the banking sector led to regulatory scrutiny, with FinCEN fining Ripple Inc. for the violation of bank secrecy in 2015. A number of other major lawsuits continue on to this day, as I am sure you may be aware so we’ll just skip over that.

Further details on Ripple website

Who Invests In Ripple?

SEED Venture Capital

ValueNet Capital

Xpring

Ripple Technology

Ripple has focused on developing user verification protocols so that network constituents can grant individual users whom they trust a given level of trust. This promotes chain transactions, given if the two individuals involved in the initial transaction do not have an immediate connection.

Cross-currency transactions usually take ~5 seconds to process across the ledger. Shortly after initiating, the XRP pathfinding algorithm identifies the shortest, most economical route to complete the transaction. As a rule, for the pathfinding algorithm to operate at its full capacity, a large number of market makers must remain open on the network in order to ensure sufficient liquidity is available.

Legitimacy Screening of Ripple

According to financial reports, Ripple has raised over $120 million in funding over the years from some of the leading VC’s in the world, as detailed above. This makes it among the largest cryptocurrencies by market capitalization currently standing at #7 as of July 2022. Ripple and its founders, possess most of the XRP supply and company programmatically sells some on a quarterly schedule.

This gives us the confidence to confirm that Ripple has an underlying fundamental value, that can be considered as “Mal” under Islamic rulings. Therefore, as a project it has legitimacy in terms of Shariah.

Is Ripple project aligned with Islamic values?

Yes, Ripple: XRP crypto project does align with Islamic values. The main aim of this project is to offer payment solutions across borders, even between parties that may not have a direct connection. Bit like a fancy or Blockchain version of Visa which is also Shariah compliant so the same applies here.

Financial Screening: Is Ripple Halal:

Financial screening ensures that the crypto asset meets the financial criteria for Shariah compliance, if it is an equity based token. Ripple is not backed by any equity, so there is no financial screening required on this coin/ token. Here we would typically look at things like debt to income ratio to ensure borrowing is limited to a tolerable level.

XRP Token Screening for Shariah Compliance

Token Type: Native

Token Uses: Vote

XRP works as a native currency on the XRP Ledger. XRP can be utilized for peer-to-peer transactions within the XRP network. With its fast block times, XRP aims to offer high throughput and discrete transactions that very next day placed settlement times at 4 seconds. 

XRP is primarily used as a bridge currency between fiat currencies through Ripple’s xRapid, a service that sends and receives value on demand. Based on this Ripple’s XRP token itself is considered halal.

Is Staking Ripple: XRP Halal?       

XRP supply does not depend on complicated techniques as various other currencies do. Their supply depends on a smart contract that supplies XRP to eliminate bloat and prevent oversaturation. There is no mining or staking in this system so we can move on to the academic and scholarly opinions

What Does The Muslim Crypto Community Think of XRP?           

Marhaba DiFi‘s Shariah governance board also beleives Ripple: XRP is halal.  

Crypto Halal Office for Monitoring and Sharia auditing on cryptocurrency markets thinks XRP crypto coin is a Halal digital asset based on its Shariah complaince screening.

Sharlife considers XRP crypto coin as a halal cryptocurrency based on the five areas assessed for Shariah complaince screening. 

Pratical Islamic Finance (PIF) is comfortable with Ripple as a halal investment

Islamic Finance Guru (IFG) believes Ripple: XRP is a halal cryptocurrency based on its method of Shariah complaince screening.

If you know of other academic or scholarly views on this, please add in comments and we will update accordingly. Alternatively, you may want to join our community of Muslims crypto investors and traders, to share, learn and profit from halal digital assets.          

Is Ripple Halal: Is XRP Crypto Coin Halal?

Yes, Ripple: XRP crypto coin is Halal as it offers an on-demand liquidity solution, xRapid, which is based on XRP and it a primary differentiator for financial institutions. Ripple’s xRapid is a liquidity solution used mainly by financial institutions as a bridge currency. None of this is against Shariah guidelines so Muslims may invest, trade and stake XRP crypto coin.

We hope you found this useful. Please view our Halal Crypto List to find suitable digital asset investments, without compromising your Islamic faith.