ABU DHABI BANK REPORTS FIRST BLOCKCHAIN-BASED TRANSACTION OF SHARIA-COMPLIANT BONDS

Last updated: June 19, 2025, 18:55 | Written by: Linda Xie

The financial landscape is constantly evolving, and recent advancements in blockchain technology are revolutionizing traditional practices.One such groundbreaking event occurred when Al Hilal Bank, based in Abu Dhabi, United Arab Emirates (UAE), announced the successful completion of the world's first sukuk transaction utilizing blockchain. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reportsThis marks a significant milestone, not only for the bank but also for the broader Islamic finance industry.This innovative approach leverages the transparency, security, and efficiency of blockchain to streamline the issuance and trading of Sharia-compliant bonds, also known as sukuk.The $500 million transaction, which matures in September 2025, demonstrates the potential of blockchain to transform Islamic finance and paves the way for wider adoption of this technology in the region and beyond. FAB is offering personal and private banking services, ranging from credit cards to Islamic banking, investment, loans, and mortgages in the UAE.This move could significantly reduce costs, increase efficiency, and enhance transparency within the Islamic finance sector, potentially attracting a new wave of investors.This initiative highlights Abu Dhabi's position as a pioneer in embracing innovative financial solutions.

Understanding Sukuk: Sharia-Compliant Bonds

Before delving deeper into the implications of this blockchain-based transaction, it’s crucial to understand what sukuk are and why they are important within the context of Islamic finance. Last week, an Abu Dhabi-based bank also announced it had completed the first sukuk (a legal instrument also known as sharia compliant bonds) transaction with blockchain. BlockchainSimply put, sukuk are investment certificates that comply with Sharia law. Abu Dhabi-based Al Hilal Bank has carried out a blockchain-based transaction for an Islamic bond worth $500 million. BTC $84,460.75-0.84 % ETH $1,575.42-1.96 % USDTTraditional bonds are debt-based instruments that pay interest, which is prohibited under Islamic principles. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant BondsInstead, sukuk represent ownership in an asset or project, and investors receive a share of the profits generated by that asset.This structure ensures that investments align with Islamic ethical guidelines.

Asset-Backed: Sukuk typically represent ownership in an underlying asset.
Profit-Sharing: Investors receive a share of the profits generated by the asset rather than fixed interest.
Sharia-Compliant: All aspects of the sukuk structure must adhere to Islamic law.

The use of sukuk allows investors who adhere to Islamic principles to participate in financial markets without compromising their beliefs. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant Bonds Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world sThis makes sukuk a crucial component of the global Islamic finance industry, which is experiencing considerable growth.They provide a viable alternative to conventional debt instruments and support the financing of projects that align with Islamic values.

Al Hilal Bank's Pioneering Blockchain Sukuk Transaction

Al Hilal Bank's successful execution of the world's first blockchain-based sukuk transaction is a landmark achievement.The bank settled a $500 million Islamic bond on a blockchain platform, demonstrating the technology's potential to revolutionize the Sharia-compliant financial landscape. The bank, an investment arm of the Abu Dhabi government, announced Monday that it settled the Islamic, shariah-compliant bond, or sukuk, worth $500 million on the secondary market, using blockchain tech.This transaction highlights Al Hilal Bank's commitment to innovation and its vision for the future of Islamic finance. Al Hilal Bank, based in Abu Dhabi, became the first ever Islamic bank to promote and settle an Islamic sukuk with blockchain know-how.According to Al Hilal Bank’s CEO, Alex Coelho, they were ""proud to be the first bank to launch a Smart Blockchain Islamic Sukuk.""

This specific sukuk transaction matures in September 2025, providing investors with a medium-term investment horizon. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant Bonds Source: CointelegraphPublished on SERVICESBy leveraging blockchain, Al Hilal Bank aims to streamline the issuance process, reduce costs, and enhance transparency. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant Bonds Novem TradingBTC Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reports Nov. 26.Blockchain's inherent security features also minimize the risk of fraud and errors, offering a more secure and reliable platform for Islamic financial transactions.

Key Benefits of Using Blockchain for Sukuk

The integration of blockchain technology offers numerous advantages to the sukuk market:

Increased Transparency: Blockchain provides a transparent and auditable record of all transactions, enhancing trust and accountability.
Reduced Costs: Automation through smart contracts can significantly reduce administrative costs associated with sukuk issuance and trading.
Enhanced Efficiency: Blockchain streamlines the entire process, reducing settlement times and improving overall efficiency.
Improved Security: Blockchain's cryptographic security features minimize the risk of fraud and cyberattacks.
Wider Accessibility: Blockchain can potentially democratize access to sukuk investments, allowing a broader range of investors to participate.

The Significance of Blockchain in Islamic Finance

The application of blockchain technology extends far beyond this single sukuk transaction. Skip to main content Bitcoin Insider. MenuIt signals a broader trend of adopting innovative technologies within the Islamic finance sector.Blockchain has the potential to address several key challenges faced by Islamic financial institutions, including transparency, efficiency, and accessibility. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology. Sukuk, a legal instrument also known as sharia compliant bonds, allows investors to generate returns without infringing on Islamic law.By embracing blockchain, Islamic finance can modernize its operations and attract a new generation of tech-savvy investors.

The move by Al Hilal Bank could inspire other Islamic financial institutions to explore blockchain applications. Head Office. First Abu Dhabi Bank Al Qurm Business Park P.O. Box 6316 Abu Dhabi, United Arab EmiratesThis could lead to the development of new and innovative Islamic financial products and services, further driving the growth of the industry.The transparency and efficiency offered by blockchain could also help to attract more international investors to the Islamic finance market.

Potential Applications of Blockchain in Islamic Finance

Here are some potential applications of blockchain within Islamic finance:

Zakat Management: Blockchain can be used to track and manage zakat contributions, ensuring transparency and accountability.
Islamic Microfinance: Blockchain can facilitate microfinance transactions, providing access to financing for underserved communities.
Takaful (Islamic Insurance): Blockchain can streamline takaful operations, reducing costs and improving efficiency.
Supply Chain Finance: Blockchain can be used to track and verify the legitimacy of transactions in Sharia-compliant supply chains.

Abu Dhabi's Role as a Fintech Hub

Abu Dhabi is rapidly emerging as a leading fintech hub in the Middle East. UAE-based Abu Dhabi Islamic Bank (ADIB) become the first Islamic bank to successfully complete a trade finance distribution transactions using blockchain technology, the media reported. ADIB successfully completed a trade finance distribution transaction in partnership with TradeAssets, a blockchain-based trade finance emarket.The city is actively promoting innovation in financial services, with a focus on leveraging technologies like blockchain, artificial intelligence, and big data. Abu Dhabi-headquartered Al Hilal Bank settled a $500 million Islamic bond on a blockchain. The bond will be shariah-compliant (or a sukuk) and matures in September 2025. Al Hilal Bank s CEO, Alex Coelho said, We are proud to be the first bank to launch a Smart Blockchain Islamic Sukuk .Al Hilal Bank's pioneering blockchain sukuk transaction is a testament to Abu Dhabi's commitment to driving fintech innovation. According to reports, The Al Hilal Bank has announced that it has completed the world s first sukuk transaction with the use of blockchain technology. What is Sukuk? Sukuk is a legal instrument, which is also referred to as sharia-compliant bonds.The local government's support for fintech startups and initiatives is creating a vibrant ecosystem for financial innovation.

The Abu Dhabi Global Market (ADGM), an international financial center, plays a crucial role in fostering fintech innovation. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant Bonds . Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed theADGM provides a regulatory sandbox that allows fintech companies to test and develop their products and services in a controlled environment. Cointelegraph.com News Al Hilal Bank has completed the world s first sukuk transaction using blockchain technology. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reports Nov. 26.This supportive regulatory environment is attracting fintech companies from around the world to set up operations in Abu Dhabi.

Furthermore, First Abu Dhabi Bank (FAB) also offers Islamic Banking services. Al Hilal Bank has completed the world s first sukuk transaction using blockchain technology. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reports Nov. 26. Sukuk, a legal instrument also known as sharia compliant bonds, MoreIt’s worth noting that while not directly related to the Al Hilal Bank transaction, this further demonstrates the landscape of Sharia-compliant financial offerings available in Abu Dhabi and the broader UAE. The Ali Hilal Bank from Abu Dhabi(UAE) has reportedly executed its first blockchain based transaction for Islamic Sukuk (aka Islamic Bonds). As per local media reports, the bank made a secondary market deal worth $500 Million USD for Islamic bond and will be maturing on September 2025. The transactionFAB's commitment to Islamic banking highlights the growing demand for Sharia-compliant financial products and services in the region.

Challenges and Opportunities

While the adoption of blockchain in Islamic finance presents numerous opportunities, there are also challenges that need to be addressed. Banco Al Hilal, con sede en Abu Dhabi, Emiratos rabes Unidos (EAU), ha anunciado que ha completado la primera transacci n sukuk del mundo con el uso de tecnolog a blockchain, informa Reuters el 26 de noviembre.One key challenge is the lack of regulatory clarity surrounding blockchain technology. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reports Nov. 26. Sukuk, a legal instrument also known as sharia compliant bonds, allows investors to generate returns without infringing on Islamic law. Reuters notes that Abu Dhabi s Al Hilal BankRegulators need to develop clear and consistent frameworks that govern the use of blockchain in financial services. Abu Dhabi-based Al Hilal Bank has conducted the first-ever blockchain-based transaction for an Islamic bond called Sukuk worth $500 million.Standardized regulations for blockchain applications in Islamic finance will be crucial to encourage wider adoption.In fact, another Abu Dhabi-based bank, Abu Dhabi Islamic Bank (ADIB), became the first Islamic bank to successfully complete a trade finance distribution transaction using blockchain technology in partnership with TradeAssets, a blockchain-based trade finance emarket. Blockchain technology again paves the way for a world first in the form of the execution of a Sharia-compliant Islamic bond in Abu Dhabi.This further exemplifies the growing trend and the need for clear regulatory guidance.

Another challenge is the need for greater awareness and understanding of blockchain technology among Islamic financial institutions and investors. Al Hilal Bank, based in Abu Dhabi, the United Arab Emirates (UAE), has announced it has completed the world s first sukuk transaction with the use of blockchain technology, Reuters reports Nov. 26. Sukuk, a legal instrument also known as sharia compliant bonds, allows investors toEducation and training programs are essential to build capacity and promote the adoption of blockchain. Abu Dhabi Bank Reports First Blockchain-based Transaction of Sharia-Compliant Bonds All News All News Except Press Releases Crypto Imported Novem cashtechnewsFinally, ensuring the Sharia compliance of blockchain-based financial products and services is paramount.Islamic scholars and experts need to work together to develop guidelines and standards that ensure that blockchain applications adhere to Islamic principles.

Overcoming the Hurdles

To overcome these challenges, the following steps are crucial:

Regulatory Clarity: Develop clear and consistent regulations for blockchain in Islamic finance.
Education and Awareness: Promote education and training programs on blockchain technology.
Sharia Compliance: Establish clear guidelines and standards for Sharia-compliant blockchain applications.
Collaboration: Foster collaboration between regulators, financial institutions, and technology providers.
Standardization: Develop industry standards for blockchain-based Islamic financial products and services.

The Future of Blockchain in Islamic Finance

The future of blockchain in Islamic finance looks promising.As the technology matures and regulatory frameworks become clearer, we can expect to see wider adoption of blockchain across various Islamic financial products and services.Blockchain has the potential to transform the Islamic finance industry, making it more efficient, transparent, and accessible.This can further attract international investors and lead to substantial growth in the sector.

The convergence of blockchain and Islamic finance could also lead to the development of new and innovative financial instruments that are specifically tailored to the needs of the Islamic market.These instruments could address unmet needs and further promote financial inclusion.For example, blockchain can be used to create Sharia-compliant crowdfunding platforms that allow small businesses and entrepreneurs to raise capital in a transparent and efficient manner.

Moreover, the successful implementation of blockchain by Al Hilal Bank showcases the potential for other banks and financial institutions to follow suit.With reduced costs, increased transparency, and enhanced security, the benefits of adopting blockchain technology for Islamic finance are becoming increasingly clear.The long-term impact of this technology on the industry could be transformative, leading to a new era of growth and innovation.

Conclusion: A New Era for Sharia-Compliant Finance

Al Hilal Bank's pioneering blockchain-based transaction of Sharia-compliant bonds marks a significant milestone in the evolution of Islamic finance.This groundbreaking event demonstrates the potential of blockchain technology to revolutionize traditional practices, enhance transparency, and improve efficiency.By embracing blockchain, Islamic financial institutions can modernize their operations, attract new investors, and promote financial inclusion.As Abu Dhabi continues to emerge as a leading fintech hub, we can expect to see even more innovative applications of blockchain technology in the Islamic finance sector.The integration of blockchain into Islamic finance could foster the creation of new financial instruments catering to the unique needs of the Islamic market.Clear regulatory frameworks, increased awareness, and standardized practices will be crucial to fully unlock the potential of blockchain in Islamic finance.This is a clear indication that the financial world is becoming more integrated with technology. Sukuk and other Islamic finance instruments are becoming easier to access and more transparent, which could lead to greater adoption and growth in the market.

Key Takeaways:

Al Hilal Bank completed the world's first blockchain-based sukuk transaction.
Blockchain offers increased transparency, reduced costs, and enhanced efficiency for Islamic finance.
Abu Dhabi is emerging as a leading fintech hub, driving innovation in the financial sector.
Clear regulatory frameworks and standardized practices are crucial for wider adoption of blockchain in Islamic finance.
The future of blockchain in Islamic finance looks promising, with the potential for transformative growth and innovation.

Are you ready to explore the possibilities of blockchain in Islamic finance?Contact your financial advisor to learn more about investment opportunities and how this technology is shaping the future of the industry.