November 26, 2018 10:14 PM
Al Hilal Bank says it has conducted the first “sukuk” transaction using blockchain technology.
The Al Hilal Bank has used a blockchain to sell and settle part of its $500 billion five-year sukuk issued in September 2018. The transaction amounted to $1 million and the sukuk was sold to a private investor, a spokesperson confirmed to Reuters.
Sukuks are Sharia-compliant Islamic bonds, or financial certificates, that allow investment in Islamic countries without breaking religious laws. They are similar to government-issued bonds, investment in which is not permitted in Islamic law because bonds yield interest.
The Abu Dhabi bank’s CEO, Alex Coelho, said it was the first bank to offer a “Smart Blockchain Islamic Sukuk,” adding that smart contracts would make transactions safer.
The bank’s digital transformation team partnered with UAE-based FinTech company Jibrel Network and was supported by Abu Dhabi Global Market’s (ADGM) FinTech Regulatory Lab.
As with other investment product settlement trials, like one recently conducted in Singapore, blockchains are being tested and used in the hopes that they reduce administrative overheads and improve record-keeping and efficiencies for financial transactions. Al Hilal bank is another example of the global permeation of blockchain technologies, even in such products as the sukuk, which must also be compliant with Islamic law.
Melanie Kramer is a freelance FinTech, blockchain, and cryptocurrency writer based between France and Canada. Melanie has studied, and retains an avid interest in, global politics, business, and economics.
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