R3 Collaborates with Dubai-Based Wethaq to Tap $120 Billion Sukuk Market

R3 inked a partnership with Dubai-based fintech startup, Wethaq, to construct next-generation financial architecture for Islamic capital markets.

Wethaq, a “platform-as-a-service” company, intends to utilize R3 Corda’s blockchain to oversee the pre-sale, issuance, management, and financialization of Sukuk securities. These securities are Islamic financial certificates comparable to bonds.

As per the International Islamic Financial Market Annual Sukuk Report 2019, the full issuance of Sukuk reached $123.15 billion last year, showing a 5 percent hike from $116.7 billion in 2017.

The blockchain platform will digitize Sukuk, minimizing both the cost and time of issuance, a method that right now includes input from several banks, clearinghouses, and trustee substances. Corda will streamline this “lifecycle.” Further, Corda may empower more extensive distribution, and thus more issuers and investors, by standardizing the digital assets with worldwide financial architecture.

R3 CEO David E. Rutter said, “Blockchain is driving an unprecedented period of innovation across capital markets, with more assets moving towards complete digitization,” adding that:

“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.”

Last year, Wethaq started working on a proof-of-concept for a blockchain solution to Sukuk administration. The intention being to have distributed ledger operate as a registry and central securities depository, make a network for market members, suppliers, and regulators to communicate, and enhance interoperability with other settlements and payments platforms.

The company also looked for regulatory endorsement from jurisdictional and Shariah bodies. In light of the exceedingly directed Islamic environment, “the employability of ‘smart clauses’ gives Shariah boards the opportunity to ensure Shariah compliance by building and mapping real world Shariah requirements within the structure itself,” R3 and Wethaq composed in a joint report.