The Golden Bridge: Evaluating Stability, Credibility, and Shariah Compliance of Gold-Backed Crypto Assets in Islamic Finance

Abstract

The thesis critically investigates the unique attributes of gold-backed cryptocurrencies and their potential role as safe-haven investments within Islamic finance. Employing a robust mixed-methods research design that integrates both empirical and qualitative analyses, the study explores key distinctions between Islamic and non-Islamic gold-backed cryptocurrencies compared to conventional cryptocurrencies, particularly during periods of market turbulence. The research critically evaluates four central dimensions: the differentiation between Islamic and conventional gold-backed cryptocurrencies; their effectiveness as safe-haven assets amid economic instability; the significance of issuer credibility relative to asset backing in fostering investor trust; and the price dynamics and behavior of gold-backed cryptocurrencies relative to the physical gold price and volatile digital assets like Bitcoin. by utilizing Advanced econometric methodologies, including wavelet coherence analysis, Transfer Entropy, and Cross-Convergence Mapping, we provide nuanced insights into the temporal and frequency-based relationships between selected digital assets and benchmark commodity gold and the thesis used qualitative assessments to rigorously examine issuer credibility through transparency metrics, regulatory adherence, and systematic evaluations of Shariah compliance. Findings highlight that gold-backed cryptocurrencies consistently demonstrate medium-term correlations with physical gold, aligning closely with traditional safe-haven characteristics; however, their price behavior occasionally mirrors the speculative volatility inherent in conventional cryptocurrencies during periods of heightened market uncertainty. Notably, issuer credibility emerges as equally influential as tangible gold reserves in shaping investor confidence and market acceptance. This research significantly enhances scholarly understanding of digital asset integration into Islamic financial frameworks, emphasizing the critical interplay between technological innovation and adherence to ethical financial principles. The outcomes serve as valuable insight for Islamic investors assessing cryptocurrency investments, assist financial institutions in designing robust digital assets, and inform regulatory bodies in formulating effective oversight mechanisms, ultimately promoting the sustainable growth of Shariah-compliant digital financial ecosystems.

Date of Award	2025
Original language	American English
Awarding Institution	HBKU College of Islamic Studies