According to recent media reports, R3 has entered into a strategic partnership with Wethaq, a Dubai-based financial technology startup, to create the next-generation financial architecture for the Islamic capital market.
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Wethaq is a “platform-as-a-service” company that aims to manage the pre-sales, distribution, management and financialization of Islamic bonds (Sukuk) using R3 Corda's blockchain.
According to the 2019 International Islamic Financial Markets Islamic Bonds Annual Report, the total issuance of Islamic bonds in 2018 reached US$123.15 billion, an increase of 5% from 2017's US$116.7 billion.
The blockchain platform will digitize Islamic bonds and reduce the cost and time of issuance, which currently involves the input of many banks, clearing houses and custodian entities. Corda will simplify this "life cycle." In addition, Corda can enable more issuers and investors by standardizing digital assets to have a global financial architecture that enables broader distribution.
R3 CEO David E. Rutter said:
“The blockchain is pushing the capital market into an unprecedented period of innovation, and more assets are moving towards full digitization.”
“Saudi Arabia and the wider Middle East are areas where we see the great potential of Corda for economic modernization, and our cooperation with Wethaq is a step towards this goal.”
Beginning in 2018, Wethaq began a proof of concept for a blockchain solution for Islamic bond management, with the goal of making distributed ledgers operate as a registry and central securities repository, improving with other settlement and payment platforms. Interoperability and create a communication network for market participants, suppliers and regulators.
The company also seeks regulatory approval from judicial and Islamic law institutions. R3 and Wethaq wrote in a joint report that, given the highly regulated environment of Islam, “the 'smart' employability gives the Shariah an opportunity to build and map real-world Islamic law requirements within the structure itself, To ensure that Islamic Shariah is observed."