HALAL Screening Cryptocurrency
Is Tether Halal?
Complete Shariah Compliance Screening of Tether to determine if it is a Halal or Haram cryptocurrency
Legitimacy Screening
What is Tether
USDT, or Tether, is a type of cryptocurrency known as a stablecoin. Unlike other cryptocurrencies that can have wild price swings, USDT is designed to maintain a stable value by being pegged to the U.S. dollar. This means that for every USDT in circulation, there should be an equivalent dollar held in reserve. This stability makes it easier for people to use USDT for transactions, trading, or as a way to hold value without worrying about sudden price drops.
What makes USDT unique is its ability to combine the benefits of digital currencies with the stability of traditional money. It allows users to quickly transfer value across the globe without the volatility that comes with other cryptocurrencies like Bitcoin or Ethereum. Plus, since it operates on blockchain technology, transactions are secure and can be done almost instantly, making it a popular choice for both casual users and traders looking to move in and out of more volatile assets.
Transparent and Credible Team
The report provides details of the founders of Tether. Some, like Brock Pierce, have a background in technology and finance. However, others have been associated with controversies, including Giancarlo Devasini and Phil G. Potter. The report notes that Tether has a long-standing domain registration. Overall, there is some evidence of a credible team, but the controversies reduce the score. Score: 60
Clear Use Case or Purpose
Tether aims to provide a stable digital currency pegged to fiat, which is widely used for trading and transactions, including in gambling and gaming. The "Islamic Scholars Opinions.pdf" states that a "currency" should have "a bona fide benefit and utility". Given that Tether's primary use is as a medium of exchange, and is not a meme coin, it does have a clear purpose, even if it is a 'digital' form of a currency that may be used for non-shariah compliant activities. Score: 80
Absence of Fraudulent Behavior
The report indicates that Tether has implemented compliance programs, and has frozen assets linked to fraudulent transactions. However, the lack of a full audit, and previous fines, raise concerns. Score: 65
Ethical Practices
Tether has faced scrutiny for its financial practices and lack of transparency, which impacts its ethical score. There are concerns about the lack of a full audit and issues with the reserves. There is also mention of it being used in scams, and for money laundering. However, there are also reports of the company taking actions against fraud. Score: 55
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Tether Halal Project Screening
- Are the project’s purpose and operation Shariah Compliant.
- Does the project operate ethically and transparently, without harm to society.
- Does the project promote positive societal or environmental outcomes.
Tether Financial Screening
- Does the revenue involve Riba (interest), Gharar (excessive uncertainty), or Haram activities.
- What red flags are hidden within the projects finances and are within permissible limits.
- Types of revenue generation activities and the percentage that may be Riba or interest based.
- Audits from reliable sources
Tether Token Screening
- Is the Token governance fair and ethical?
- Are profit-sharing mechanisms (e.g., staking rewards, dividends) compliant with Islamic Finance?
- Does the token’s design, or unlock schedule raise unethical concerns?
- Halal underlying asset, and free from impermissible elements
Is Staking Tether Halal?
- Are the staking operation aligned with Shariah-compliant structures.
- Does the staking avoid Gharar (excessive uncertainty) and Maysir (gambling)?
Tether Shariah Compliance Score
- Total Shariah Compliance Score out of 100
- 27 different components researched
- More comprehensive than any other platform