- Al Hilal Bank has conducted the first Islamic Sukuk sale via Blockchain
- The Sukuk is worth $500 million and is expected to mature in 2023
- This was done as a collaboration between the bank and the Jibrel Network
The world’s first Islamic Sukuk (Bonds compatible with Islamic law) sale through blockchain was recently conducted by Al Hilal Bank in the United Arab Emirates. Blockchain was used in the resale and settlement of the bank’s sukuk which is worth $500 million and will mature in September 2023.
Islamic Bonds on the rise
The resale of a sukuk was a very smart move on the bank’s part as sukuks have seen a 50% increase in 2017 with $97.9 billion worth of them issued in 2017.
The use of Blockchain helps make the sukuks more secure and are creating a new class of assets called smart sukuks. The blockchain was also credited with reducing the large overhead associated with the sale of sukuks while also ensuring sharia compliance.
“We are proud to be the first bank to launch a ‘Smart Blockchain Islamic Sukuk’; once again the bank has demonstrated that it has the capabilities of leading in the competitive market of Islamic banking,” said Al Hilal Bank’s CEO, Alex Coelho.
He also said that there are many benefits to using blockchain for the sukuks including safer transactions and compliance with sharia law.
This new venture and the subsequent resale of the sukuks was made possible by a collaboration between Al Hilal bank’s
Digital Transformation team and the Jibrel Network, a UAE-based FinTech.
There was also support from the Abu Dhabi Global Markets’ (ADGM) FinTech platforms which were set up to foster innovation in the financial sector in the region.
Both the Islamic exchange and this new sukuk trade are in line with the Emirate’s culture which has endeared it to investors and the public.
This is also a testament to blockchain’s adaptability to various culture’s financial values and practices.
“We will be able to provide Islamic financiers with the necessary tools to facilitate Islamic agreements with the same speed, volume, and efficiency experienced in conventional finance, and potentially develop new digital asset classes that were previously unimaginable,” said Jibrel Co-Founder, Talal Tabbaa.