Wethaq, a Dubai-based FinTech firm has teamed up with R3 in a blockchain deal. This partnership aims to create a platform that would deal with issuing and trading Sukuk securities. It would run R3’s Corda blockchain. Wethaq unveiled this news via a press release on August 28, noting that its new platform would be sharia-compliant.
Per the press release, this deal seeks to digitize Islamic markets. As such, it would let issuers, investors, central banks, and regulators to transact seamlessly in these markets. The platform aims to enhance the market infrastructure that underpins the issuance and trading of Sukuk securities.
Wethaq noted that there is an unmet demand for Sukuks. These securities have a global market of approximately $120 billion annually. To help address this demand, the new platform would make Sukuk easily accessible by digitizing its issuance. At the moment, the issuance process is manual. As a result, it is quite lengthy and costly.
Modernizing the Middle East Economy
Sukuk certificates work similarly to bonds. However, Sukuks have one feature that sets them apart from traditional bonds. They show partial ownership in an asset, while bonds denote a debt obligation. Sukuks share the risk of their backing asset. Due to this, their holders do not have a guarantee of getting their initial investment back.
To help ease the issuance and trading of Sukuks, R3 aims to reform the Saudi Arabia and Middle East market at large.
In the press release, R3’s CEO, David Ruttler said,
Saudi Arabia and the wider Middle East region are areas where we see huge potential for Corda to modernize the economy and our partnership with Wethaq is a step towards achieving that.
Speaking about this partnership, Mohammed Alsehli noted,
Our joint focus is on building world-class financial infrastructure in Saudi Arabia, in alignment with the Kingdom’s Vision 2030, and the UAE, pursuant to their ambitious fintech agenda, before we expand to the entire Middle East and Southeast Asia.
Wethaq’s and R3’s partnership comes after Stellar unveiled that it was the first blockchain protocol to become Sharia-compliant. The platform announced this achievement in July last year, noting that it had received a certificate from the Shariyah Review Bureau. Per the announcement, this feat would let the firm expand its operations into areas that require compliance with Islamic financial principles.
Do you think R3’s partnership with Wethaq will help push for the mass adoption of the blockchain and crypto sectors in the Middle East? Let us know in the comments below.