Tags
This Ramadan, Blossom Finance is offering a free service allowing Muslims to pay their annual obligatory charity payment (zakat) owed against cryptocurrency holdings directly using the blockchain. Charity payments collected by Blossom will go towards orphans and widows in Sumatra and Central Java, Indonesia via Blossom’s network of cooperatives and nonprofits. Blossom is offering the service free of charge and will not collect any fee for payments using the service.
JAKARTA, Indonesia. May 23, 2018 – As Muslims around the world settle in to the first few days of fasting and spiritual reflection for the month of Ramadan, those Muslims holding cryptocurrencies like Bitcoin have one less worry: now, they can pay their obligatory charity payment directly via the blockchain.
For more information about how to pay zakat via the blockchain, visit: https://blossomfinance.com/zakat
Zakat Must Include Crypto Assets
Zakat is an annual charity obligation for Muslims; this obligation is calculated based on a basic living index cutoff amount called nisab which represents a basic standard of living index. Those whose net wealth falls below this limit are exempt from paying zakat. Typically, the nisab equivalent to three ounces of gold. People having assets net greater than nisab for a full year qualify as having an obligation to pay zakat.
The amount of Zakat is calculated at 2.5% of liquid assets held for at least a full year: gold, silver, cash, savings, investments, rent income, business merchandise or profits, shares, securities, and bonds all qualify as part of the calculation. Since cryptocurrency like Bitcoin qualifies as a liquid asset, Muslims must take care to include their cryptocurrency assets in the calculation for their zakat obligation, as well as to keep track of how much cryptocurrency they’ve held for a full year, since assets held for less than one year need not be included in this calculation.
Money For the Poor & Needy
There are eight groups of people who qualify to receive zakat, and of these, most scholars agree that preference should be given to the poor, the needy, and those burdened with debt. All zakat collected by Blossom will be channeled to the poor and the need, specifically focused on widows and orphans within Central Java and Sumatra in Indonesia, by way of Blossom’s network of cooperatives and nonprofits in Indonesia.
Although scholars agree that the collectors of zakat are entitled to a share, Blossom Finance will not collect any fee for the service.
To date, Muslims have pledged $20,000 USD equivalent of zakat payments to be paid during the month of Ramadan using Blossom’s free Zakat Via Blockchain service.
Have Bitcoin Will Donate
Blossom’s Zakat Via Blockchain payment service arose by accident; some members of the Muslim community who had cryptocurrency assets were looking for an option to pay their annual charity obligation, but didn’t find any existing facility to send their cryptocurrency directly.
“There’s many fantastic zakat organizations out there. We’re not trying to replicate or supplant them by any means. Basically some Muslims reached out to us via our website asking ‘how can I pay my zakat that I own on my Bitcoin and Ethereum?’ and there wasn’t currently an option for them” explained Blossom CEO Matthew J. Martin. “We have a great network of nonprofits and cooperatives in Indonesia which already have well-run zakat programs, so we’re happy to connect Muslims with them and facilitate the payment via cryptocurrency.”
“If you have a zakat obligation on your crypto, it would be fine to donate the money directly to a poor or needy person. I mean you could set up a Bitcoin wallet for a poor person and send them Bitcoin. That’s an option. But for many Muslims that’s just not a practical option.”
How it Works
Blossom will accept payments in cryptocurrency directly via the Blockchain to a Blossom controlled wallet held at a cryptocurrency exchange in Indonesia. Blossom then converts the cryptocurrency to Indonesian Rupiah, and deposits the amount into the bank accounts of their cooperative and nonprofit partners located in rural areas in Indonesia.
Notes Martin regarding exchange fees: “we’ve consulted with our internal shariah advisory about this matter, and exchange fees incurred when converting from cryptocurrency to local currency qualify as part of the total zakat payment. Even still, we’ll do our best to trade the crypto in a way that incurs minimal or no fees.”
An Easier Way to Reach Those In Need
As for why would Muslims want to pay their zakat in cryptocurrency, Martin notes that for Muslims who have zakat-eligible cryptocurrency assets, it’s a much more effective way to impact the poor by sending the money directly where it’s needed. Money can be transferred internationally via the blockchain with low fees and channeled directly to those in extreme need.
“Honestly we cannot take credit for this idea. Some Muslims reached out to us and asked if we could help. Since we already have all the facilities to do this, we’re just trying to give a little something back to the community” explained Martin.
Blossom's service is not intended for those who have non-cryptocurrency liquid assets, but rather for Muslims who specifically have cryptocurrency assets that are zakat-eligible and need an easy way to donate.
Although Blossom’s CEO expressed excitement at the prospect of helping Muslims pay their zakat, he noted that it’s not an area Blossom plans to focus on in the future. “To any zakat organizations out there who want to accept crypto directly: please get in touch - I will personally help you and your organization get set up to accept zakat payments via the blockchain in the future.”
About Blossom Finance
Blossom Finance helps institutions to raise cost-effective, Shariah-compliant financing from global investors using blockchain technology on its Smart Sukuk platform. Blossom was founded in 2014 to increase the availability of halal financial products using technology. Since 2015, Blossom has been helping microfinance institutions in Indonesia raise funds from international investors to fund micro-businesses aimed at reducing regional poverty. Blossom Labs, Inc. is a US Delaware corporation.
Legal Disclaimer
Blossom is neither a charity nor registered as a nonprofit under United States law. Blossom’s zakat service is provided strictly as a free service to those seeking an option to pay zakat from their cryptocurrency holdings. All zakat payments received by Blossom will be channelled to Blossom’s network of nonprofits and cooperatives in Indonesia. Blossom will provide detailed beneficiary reports to all payers of zakat, however Blossom’s financials are not prepared in a manner consistent with a US nonprofit organization.
