Sukuk on blockchain: A legal, regulatory and Shari'ah review
Document Type
Article
Publication Date
7-6-2021
Abstract
Purpose This paper aims to explore issues arising from sukuk (Islamic bonds) on blockchain, including ShariMODIFIER LETTER RIGHT HALF RINGah (Islamic law) and legal matters. Design/methodology/approach A qualitative methodology is used in conducting this research where relevant literature on sukuk was reviewed. Through a doctrinal approach, the paper presents analyses on the practice of sukuk and sukuk on blockchain by discussing its legal, ShariMODIFIER LETTER RIGHT HALF RINGah and regulatory issues. This culminates in a conceptual analysis of blockchain sukuk and its peculiar challenges. Findings This paper reveals that digitizing sukuk issuance through blockchain remedies certain inefficiencies associated with sukuk transactions. Indeed, structuring sukuk on a blockchain platform can increase transparency of underlying sukuk assets and cash flows in addition to reducing costs and the number of intermediaries in sukuk transactions. The paper likewise brings to light legal, regulatory, ShariMODIFIER LETTER RIGHT HALF RINGah and cyber risks associated with sukuk on blockchain that confront investors, practitioners and regulators. This calls for deeper collaboration in research among ShariMODIFIER LETTER RIGHT HALF RINGah scholars, lawyers, regulators and information technology experts. Research limitations/implications As a pioneering subject, the paper notes the prospects of blockchain sukuk and the current dearth of literature on it. The paper would assist relevant Islamic capital market entities and authorities to determine the potential and impact of blockchain sukuk in their respective businesses and the financial system. Practical implications Blockchain sukuk will assist in addressing issues inherent in classical sukuk and in paving the way to innovative solutions that will facilitate and enhance the quality of sukuk transactions. For that, sukuk would require appropriate regulatory technology to address its governance and regulation peculiarities. Originality/value Integrating sukuk with blockchain technology will add value to it. The paper advances the idea that blockchain sukuk revolutionises sukuk and enhances its practice against known inadequacies.
Keywords
Blockchain, Blockchain technology, Legal issues, Regtech, Regulatory issues, Sukuk
Divisions
fac_law
Funders
QRC plc,IBH [Grant No: IF057A-2018]
Publication Title
ISRA International Journal of Islamic Finance
Volume
13
Issue
1
Publisher
Emerald Group Publishing Ltd