Indonesia’s Blossom Finance To Start Shariah-Compliant Blockchain Bonds Known As Sukuks
If you know something about the Islamic world, you know that it is very important for businesses to be compliant with the Islamic religious law, the Shariah. Now, a new Indonesian financial firm is trying to create a bonds service called Sukuks which will use the blockchain to finance social projects and will be fully compliant and compatible with the Shariah.
The company is called Blossom Finance and it already has plans for other blockchain-based bond projects in the future like a green waste disposal project and a hospital expansion, but it will focus on this Shariah-compliant project.
Blossom Finance’s main idea is to target the Islamic market, which is not too friendly with projects that are not compliant with the Shariah. Because of this, acquiring the compliance will enable the company to work in many countries that could have blocked it otherwise in case the company was not compliant with the religious law.
It is important to remember that the Islamic countries have plenty of potential customers for funds and that the blockchain technology is not very strong in the market up until this point, so this means that the company will have an edge when exploring this new market.
This project, which will be known as Smart Sukuk, was first introduced in May and it focused on automating legal and payment aspects of bonds. By using the technology of Ethereum and its smart contracts, the company hopes to create a service that can be more efficient than the other ones available at the market right now.
Blockchain Projects In The Bonds Market
The bonds market is increasingly starting to pay attention to the blockchain technology. A recent trial from the World Bank in August was responsible for raising over $81 million USD. Another project, this one created by the city council of Berkeley, California, was created this year and important financial companies like JP Morgan Chase are already using the technology.
In JP Morgan Chase’s case, the company is making a partnership with the National Bank from Canada in order to trial a blockchain platform that will be used to help in the debt issuance process.
Many of the involved believe in the potential of the blockchain technology and affirm that it can bring major changes to the industry and start a new path of prosperity for this market because of all the costs that it can cut and the effectiveness that it can achieve by streamlining many processes.