Islamic Development Bank to Research Sharia-Compliant Blockchain Products

by Sujha Sundararajan

The Islamic Development Bank (IDB) of Saudi Arabia's research outfit is reportedly using blockchain to develop new sharia-complaint financial products.

According to Reuters, the Islamic Research and Training Institute has struck an agreement with two startups – Ateon and SettleMint, the latter of which is based in Belgium – to perform technical feasibility studies ahead of any deeper research and development. SettleMint published the news about the deal on its official blog earlier this week.

Sharia-compliant finance generally forbids the collection of interest on loans, as well as speculative investments. While it's unclear what specific types of products it might ultimately consider deploying, the group reportedly said that it was interested in asset exchanges that can settle in near-instant time.

Matthew Van Niekerk, CEO and founder of SettleMint, said in a statement:

"We are very excited to be able to contribute to this project. One of the core values of SettleMint has always been to change the world for the better, and by using the blockchain technology to further financial inclusion and development of the 57 member countries, fits our ambitions to the letter."

According to the statement by SettleMint, blockchain smart contracts can help automate the contractual processes for Islamic institutions while "alleviating the additional administrative and legal complexities as well as redundancies associated with Sharia-compliant financial products."