Al Hilal Bank closes world’s 1st blockchain sukuk transaction

Al Hilal Bank closes world’s 1st blockchain sukuk transaction
Blockchain was used to transact an amount of $500 million of the bank’s senior sukuk in a secondary market deal

Abu Dhabi – Mubasher: Al Hilal Bank on Monday revealed that it has become the world’s first Islamic bank to use Blockchain technology for the resale and settlement of sukuk, Islamic bonds. 

Blockchain was used to transact an amount of $500 million of the bank’s senior sukuk in a secondary market deal, matured in September 2023, according to the lender’s statement.

“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,” Alex Coelho, CEO of Al Hilal Bank, commented.

This is considered the first time to use the blockchain to execute a sukuk transaction.

The bank seeks to transform the sukuk market by adopting blockchain and integrating it into their infrastructure in an effort to pave the way for innovative digitised Islamic bonds (smart sukuk), the statement showed.

“The advantages of using smart contracts range from safer transactions with robust Shariah compliance to the unlocking of new opportunities. The partnership between Al Hilal Bank and UAE incubated startup, Jibrel, highlights Abu Dhabi Global Markets’ (ADGM) success in attracting, nurturing and fostering innovation,” Coelho said.

The initiative resulted from the collaboration of Al Hilal Bank Digital Transformation team with Jibrel Network, a UAE-based FinTech.

Sukuk have been successful and one of the fastest growing asset classes with $97.9 billion worth of Islamic bonds issued in 2017.

‘We look forward to supporting Al Hilal Bank and Jibrel in the RegLab to build solutions that will bolster and transform the Islamic finance sector,” Richard Teng, CEO of ADGM, said.