Today enterprise blockchain company R3 announced that Dubai fintech startup Wethaq has signed a strategic partnership. Wethaq is targeting Islamic Capital Markets, starting with Sukuks. Earlier this year S&P ratings estimated the 2019 issuance of Sukuks would be $115 billion, the same as 2018.
Blockchain has seen significant activity in asset-backed securities, which goes to the heart of Sukuks. As R3’s CEO David Rutter put it: “Blockchain is driving an unprecedented period of innovation across capital markets, with more assets moving towards complete digitisation.”
Sharia law prohibits charging interest. As a result, some Sukuks are similar to bonds. However, instead of paying interest, Sukuks are sometimes issued at a discount and linked to an asset. So at maturity, there’s a capital gain.
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