United Arab Emirates state-owned financial institution, Al Hilal Bank, is now the first Islamic bank to execute a Sukuk (Sharia-compliant bond) transaction on a blockchain in the world.
In a secondary market deal, Al Hilal Bank used blockchain technology to resell and settle a portion of a US$0.5 billion Sukuk issued two months ago and scheduled to mature in September 2023.
The Chief Executive Officer of Al Hilal Bank, Alex Coelho, while speaking said, the institution integrated the DLT into Sukuk deals, thereby making the transactions safer while also making sure it is compliant with Islamic law.
“The advantages of using smart contracts range from safer transactions with robust Shariah compliance, to the unlocking of new opportunities,” Coelho said in a statement.
He added that, smart Sukuks will not only boost efficiency during transactions but will also cut down on overhead costs that are incurred during issuance and settlement.
Although, Al Hilal may be the first Islamic bank to execute a Sharia-compliant bond transaction on the blockchain, it is however, not the first time the World is seeing a regular bond has being settled on a blockchain.
It would be recalled that in late August, the World Bank also settled a two-year bond worth US$73 million on the Ethereum network.