First-ever Islamic cross-border transaction using blockchain
The Abu Dhabi Islamic Bank (ADIB) has become the first Islamic bank, also known as "non-interest banking based on the principles of Sharia law", to have successfully executed a cross-border trade finance distribution transaction using blockchain technology in collaboration with TradeAssets.
As early as 2016, Middle Eastern banks such as Emirates NBD (in partnership with ICICI Bank in India) have undertaken pilot international trade finance transactions and remittance on blockchain. In 2017 Emirates Islamic became the first Islamic bank in the UAE to integrate blockchain technology into its cheques.
In May 2019, ADIB became a member of TradeAssets , a global fin-tech platform based in the UAE that is a platform for the originating and distributing trade finance assets. Haytham Elmaayergi, Global Head of Transaction Banking at ADIB said:
The completion of the first trade distribution transaction using Blockchain by an Islamic bank shows that ADIB is at the cutting-edge of global transaction banking. As the only Islamic bank providing end-to-end Sharia’a-compliant trade financing through digital channels, ADIB is committed to expanding its digital footprint in trade financing and distribution, enhancing the efficiency and productivity of businesses across the region and globally.
Though there are different views on whether cryptocurrency is Sharia-compliant due to requiring any debt to be backed by goods and services, it is clear there will be an increasing number of Islamic banks using blockchain and smart contracts to reduce administrative burdens of its Sharia-compliant financial products.