In a major push to integrate blockchain technology into day-to-day operations, Abu Dhabi-based Al Hilal Bank has conducted a blockchain-based transaction for a $500 million worth Islamic bond.
Al Hilal, which oversees investments on behalf of the Abu Dhabi government, announced November 26, 2018, that it settled the Shariah-compliant bond (sukuk) of half-a-billion dollar on the secondary market using blockchain. The bond will mature in September 2013.
Per the announcement, Al Hilal was aided by UAE-based FinTech startup Jibrel Network with their blockchain resources.
The bank also stated that its objective is to leverage the power of blockchain technology to bring revolutionary changes to the Sukuk market. To turn that vision into reality, Al Hilal is considering issuing “smart” or digitized sukuks, which it believes will help lower the overhead costs and make transactions more efficient.
“We are proud to be the first bank to launch a ‘Smart Blockchain Islamic Sukuk’. The advantages of using smart contracts range from safer transactions with robust Shariah compliance to the unlocking of new opportunities,” Al Hilal Bank’s CEO, Alex Coelho, commented.
Al Hilal also acknowledged that sukuks are currently only of the fastest growing asset classes. To put its growth into perspective, the bank issued just about $98 billion worth of the bonds in 2017 alone — an approximately 50% hike as compared to the corresponding figure from the previous year.