ISLAMABAD- In Dubai’s decades-old Gold Souk, customers from around theworld haggle over bangles and necklaces. Elsewhere in the emirate, theregion’s top centre for gold trade, bullion is playing a new role infinancial engineering.

A local start-up company founded last year, OneGram, is issuing agold-backed cryptocurrency — part of efforts to convince Muslims thatinvesting in cryptocurrencies complies with their faith.

The global surge of interest in bitcoin, ethereum and othercryptocurrencies extends into the Gulf and southeast Asia, the main centresof Islamic finance.

But because they are products of financial engineering and objects ofspeculation, cryptocurrencies sit uneasily with Islam. Sharia principles,in addition to banning interest payments, emphasise real economic activitybased on physical assets and frown on pure monetary speculation.

That has triggered debate among Islamic scholars over whethercryptocurrencies are religiously permissible. Cryptocurrency companies areseeking to sway the debate by launching instruments based on physicalassets and certified as valid by Islamic advisors.

Each OneGram cryptocurrency unit is backed by at least a gram of physicalgold stored in a vault. The idea is to limit speculation.

“Gold was among the first forms of money in Islamic societies so this isappropriate,” said Ibrahim Mohammed, the Briton who founded the firm withother investors last year. – Agencies