Islamic finance standards-setting body AAOIFI is working on a standard for online Islamic crowdfunding and plans to have it ready by the end of next year.
"The objective of this standard is to set out a comprehensive framework for Islamic crowdfunding governance with detailed coverage of areas relating to the cybersecurity and disclosure requirements in such instruments," Dr. Rizwan Malik, Senior Manager, Standards Implementation & Strategic Developments at AAOIFI, told Salaam Gateway.
He said the standard has been discussed at a working group, and a preliminary study presented to the AAOIFI Governance and Ethics Board (AGEB) was approved. The AGEB is responsible for issuing standards related to governance, auditing and ethics.
The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions has a working group that has some of the leading experts in the field who are helping in development of the standard, according to Malik.
"We are in the process of preparing the Exposure draft (ED) – a document in a standard type format used for public consultation," he said. "By mid-2021 the ED will be ready and the plan is to finalise the standard by the end of 2021."
Other industry bodies like the Islamic Financial Services Board (IFSB) have not published specific standards on crowdfunding. IFSB overlooks standards for regulatory and supervisory agencies while AAOIFI’s standards are used by Islamic financial institutions.
In March 2020, IFSB issued an Exposure Draft of a Standard on Guiding Principles for Investor Protection in Islamic Capital Markets (ED-24) for Public Consultation.
The standard aims to define best practices for investor protection in relation to the Islamic capital markets as well as increase harmonisation of regulatory practice. Whilst the standard covers traditional products like sukuk and Shariah-compliant equities, it also addresses emerging financial technologies including crypto-asset platforms – specifically those that deal with assets which represent an interest in a business) – peer-to-peer financing platforms, equity crowdfunding platforms and online retail trading and investment platforms.
(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim [email protected])
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