Global Sukuk Market Size
The global sukuk market has reached approximately $4 trillion, reflecting steady growth in Islamic finance. Sukuk are Islamic financial instruments similar to bonds but based on profit and loss sharing instead of interest. They are issued by governments and corporations to finance infrastructure or business expansions, adhering to Sharia principles that prohibit usury (riba) and excessive uncertainty (gharar).
Factors Driving Sukuk Growth
The growth of the sukuk market is driven by demand from the world's 1.9 billion Muslims seeking Sharia-compliant alternatives. Governments in countries like Malaysia, UAE, and Saudi Arabia support this sector by issuing sovereign sukuk and enhancing regulatory frameworks.
Digitalization Potential via Blockchain
Blockchain technology offers an opportunity to digitalize sukuk by issuing tokenized sukuk, increasing liquidity, transparency, and reducing costs. Smart contracts can automate profit distribution and principal repayment while complying with Sharia, such as prohibiting interest.
Challenges of Sukuk Digitalization
Digitalizing sukuk faces regulatory and technical challenges, including ensuring Sharia compliance in smart contracts and avoiding riba or gharar in digital platforms. The legal ecosystem must also evolve to support digital religious assets widely.
How Qist Implements This
On the Qist platform, sukuk digitalization is implemented by issuing digital sukuk on the Base blockchain. Each sukuk represents real ownership in a tangible asset, with USDC distributions as profit distributions without interest. The smart contract adheres to the surplus refund principle and a 3-day grace period, ensuring Sharia compliance. The contract is open and verified on BaseScan for transparency.
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