UAE: Diamond Standard gets Shariah nod for diamond use in Islamic finance

Dubai: Diamond Standard Co., the US-based producer of the world’s only regulator-approved diamond commodities, has received a Fatwa endorsing its diamond products for use in Islamic finance.

The religious ruling was issued by Sheikh Dr. Mohamed Ali Elgari, a leading voice in Islamic banking and finance, who has previously served on the Shariah boards of top institutions such as Abu Dhabi Islamic Bank, Dubai Islamic Bank, HSBC, and Standard Chartered. His approval makes Diamond Standard’s coin and bar commodities suitable for asset-backed Islamic finance transactions such as Murabaha.

In Islamic finance, charging interest on loans is not allowed under Shariah law. Instead, financial transactions must be backed by real assets. One common structure is commodity Murabaha, where metals like nickel or aluminum are used as underlying assets. However, using such metals has proven costly due to high storage and delivery fees, and recent changes to standards mean many paper-based transactions are no longer compliant.

Diamond Standard’s products—physical coins and bars made from standardized sets of natural diamonds—are now Shariah-compliant, fully deliverable, and up to 97% cheaper to store and deliver than metals like copper. This could help Islamic banks cut costs while staying compliant with regulations.

To support Islamic finance institutions in the region, Diamond Standard plans to launch a trading and commodity holding company within the GCC. The firm has already raised $280 million in capital and is currently in talks with Gulf investors to set up a local base for diamond production, import, export, and trading.

Each diamond commodity is embedded with a wireless chip that records ownership on a public blockchain. This makes it easy to verify and transfer titles securely, reducing uncertainty and supporting real-time trades. Bloomberg already publishes daily prices for these assets, and US regulators have approved them for settling futures and options contracts.

Diamond Standard’s entry into the Islamic finance space marks a significant moment for both the commodities market and the $5 trillion global Islamic finance industry. While it’s still early days, this move could reshape how Islamic banks and investors approach asset-backed finance—offering a rare blend of innovation, compliance, and cost efficiency.