Prop 33: VARA update and United Contributors DAO proposal

Dear Islamic Coin Community,

We are excited to share our reflections on the present and future of our project. Right now, we are making history, and years from now, we will look back on these moments as pivotal milestones on the path of bridging Web3 and Islamic finance.

As we continue to update you on vital changes within the HAQQ Network, the enhancement of its tokenomics, and fundamental decisions about its structure, we wish to discuss an important topic concerning our regulation with VARA.

Islamic Coin was conceived as an innovative way to unlock the potential of web3 for two billion Muslims worldwide. Our aim is to establish a project that not only represents technological innovation by providing access to financial products and services but also has a profound ideological foundation, serving the community through charity and support.

From the very first day of VARA’s establishment, we sought a license, following the advice of our respected advisors from the region. While we clearly understood how to develop the project in terms of web3 technology and tokenomics, our strategy for local market existence depended heavily on our advisors. Hence, we turned to the VARA as a regulator, who, at that time, had neither a team nor regulations in place. In fact, it is extremely rare for Layer 1 protocols to seek or even receive licenses because blockchain, with its gas token, is merely a neutral technology, not a financial product. We understand that token issuance may be a regulated activity, however VARA had not issued its rulebook in 2022. This led to a legal dilemma during our public token listing, as recounted in our last community update that resulted in an investigation by the regulator. The investigation followed a lengthy process as we sought to obtain permission for our community to trade the token on the local market. Many of the regulator's requirements were restrictive, ultimately affecting our listings, partnerships, and, consequently, the token price. However, we endeavored to comply with all these restrictions, working methodically and consistently with the regulator. For this purpose, we hired the best experts in the field of legal and compliance. Our project was also thoroughly audited by VARA’s legal team and their other employees, who changed frequently leading us to receive repetitive questions, critiques of our business idea and its implementation.

While, we have been open to changes and to adherence with requirements issued by VARA, from time to time irrespective of the nature of such requirements and notwithstanding that we may have found such requirements onerous at times, VARA has denied us an approval for issuance of Islamic token, formally citing risk based concerns. This, of course, was against the backdrop of meeting all formal requirements, which included tendering all requested documents (a process that took us 8 lengthy months). It is our belief, based on interactions with VARA employees and information gathered, that this decision was not linked to formal features but to VARA's reluctance to endorse an Islamic cryptocurrency under their auspices.

An important aspect is that in parallel with the VARA process, we received proposals from governments of other Muslim countries to come under their regulation. Having representations and obtaining local licenses for specific regulated parts of our products and services is an important task and the only effective way to build such a complex ecosystem as HAQQ. However, we do not consider it efficient to attempt to regulate the technology itself, the blockchain, and its gas token - ISLM.

We have now decided to exit the Dubai market and thus the jurisdiction of VARA, which will no longer subject us to the regulatory requirements of VARA. We aim to focus entirely on products, listings, and market-making - activities that bring real benefits to our community. It is unfortunate how things turned out with VARA. In our view the regulator is not yet ready to support complex WEB3 projects like ours, preferring centralized solutions: exchanges, custodians, asset managers, etc. (not a single token issuance approval has been issued to date).

Part of our new strategy will be to limit the freely circulating ISLM and ensure the growth of key network metrics. First and foremost, as a team, we are accountable to the holders of ISLM. Therefore, we introduce the United Contributors DAO. All coins distributed to contributors, advisors, assistants, and intermediaries as rewards, as well as all coins held by the founders and the project team (excluding the account from which Haqq Association delegations come to vetted validators), are proposed to be directed to this DAO through a community vote. The sale of these tokens will be postponed. At the same time, we continue to work assiduously to improve the use cases of ISLM tokens for the possibility of immediate and future improvement of token price and the overall stability of our project as it gains strength in the broader market.

These measures, along with our relocation and our unwavering commitment to serving the community and promoting Islamic values in Web3, will help Islamic Coin overcome current challenges and realize its full potential.

Islamic Coin is here to stay; going forward, we will rely solely on ourselves and our community. We thank everyone who believes in our project and supports us. Together, we will build a future where Islamic values and cutting-edge technologies go hand in hand, creating a better world for all of us.

With respect and gratitude,

The Islamic Coin Team

Shall the community accept this proposal, the Haqq team will develop a software upgrade and submit it in another proposal that will transfer the locked portion of coins (the unlocked coins will remain in place) distributed to contributors, advisors, assistants, and intermediaries as rewards, as well as all coins held by the founders and the project team (excluding the account from which Haqq Association delegations come to vetted validators) to the account of the UnitedContributorsDAO module account, maintaining their unlock schedule. As a result, the management of these coins will be handled collectively by the internal governance of this DAO. The governance principles will be determined later, following discussions with the participants of this DAO, and they will be implemented in another software upgrade and submitted in one of the future proposals.