Though traditional banks are already actively joining the blockchain community for a relatively very long time, Islamic banks that build their work in compliance with Shariah law principles used to keep apart from the fresh developing trends. Yet, Al Hilal Bank, primarily based in Abu Dhabi, has changed the game.
First Sukuk transaction
The UAE-based Islamic Al Hilal Bank has declared that it's managed to finish “the world’s 1st Sukuk transaction” with the assistance of blockchain technology. Sukuk represents itself a legal document and is additionally called “Sharia compliant” bonds. This tool permits investors to receive returns from their funds while not breaking Islamic law.
Al Hilal Bank, that is an investment arm of the Abu Dhabi government, has entered in a partnership with a UAE-based Fintech company referred to as Jibrel plan to settle the first Islamic $500 million bond on the secondary market utilizing blockchain tech. it's additionally known that it's a five-year Sukuk that's maturing in September 2023.
The partnership between the bank and also the Fintech firm was achieved via the innovative platform created by Abu Dhabi international Market to make sure cooperation between monetary institutions within the region and fintech startups.
This collaboration may be a real milestone for the Islamic banking industry. Blockchain has never been used before to execute a Sukuk trade operation.
Bank’s Vision
According to the bank, their main aim is to revolutionize the Sukuk market with the assistance of blochckain. Namely, such tech innovations have an opportunity to remodel this market infrastructure with a view to ensure quicker and additional efficient transactions and to decrease their prices.
Speaking regarding their new accomplishment, Alex Coelho, chief executive officer of Al Hilal Bank, said:
“We are proud to be the first bank to launch a wise Blockchain Islamic Sukuk; yet again the bank has demonstrated that it's the capabilities of leading in the competitive market of Islamic banking. the benefits of using smart contracts vary from safer transactions with robust Shariah law compliance to the unlocking of recent opportunities.”
Islamic Sukuks are thought-about to be one in all the quickest developing asset classes. In 2017 the bonds were offered for $97.9 billion which implies a 50 % growth as compared with 2016.
Blockchain and Banking
This summer, once winning a mandate from the world Bank the Commonwealth Bank of Australia (CBA) has delivered the primary ever bond transaction using blockchain.
The main plan behind the initiative was to use blockchain with a view to boost the interaction with debt capital market intermediaries and agents, change processes of funds raisings and securities trading further on enhance operations and increase regulatory control.
The results of the transaction has exceeded all the expectations. As TopMarketGroup has reported, the first ever blockchain-based bond has raised $110 million.
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