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Bitcoin: The Islamic discussion arrives - some aspects!

Dear Readers,

Following up on my previous posts on Bitcoin, this one is an attempt to gather and link up with the increasing discussion on the subject matter from an Islamic perspective.

My latest post was:
http://www.islamicfinance.de/?q=node/10303

My personal view is critical on bitcoin, as I do not see any other use than payments, hence no intrinsic value. Value does not come from costs creating something but in my understanding from utility, rather than price and appreciation - but may be this point is more my thinking than a Shariah argument...

Further light on Fiqhi points are given in this paper:

http://darulfiqh.com/wp-content/uploads/2017/08/Research-Paper-on-Bitcoi...

Please check the following sources and my initial attempt for some comment, well taking in account that any summary will be deficient due to time constraints:

Diyanet, the Turkish religiouos authority has spoken out against bitcoin. See

http://www.euronews.com/2017/11/28/bitcoin-is-not-compatible-with-islam-...

Hada DBank: A Blockchain-Based Islamic Bank

#Malaysia-based HADA Dbank is set to bring Islamic banking principles to the blockchain ecosystem. Hada DBank follows Islamic Financial Laws prohibiting risky ventures, having a maximum Liability to Asset ratio of 1:3. The bank allows users to have access to a full-feature personal banking service. This includes a free encrypted account and e-Wallet, a zero-fee charge on cryptocurrency exchanges and access to the financial advisor robot HUDA. Hada DBank will soon host a token generation event to raise funds for the full development of products and services. The native HADACoin will be a digital asset based on the Ethereum platform. HADACoin will be sold during the pre-sale at an increased rate adjusting to supply, starting at a rate of 1 ETH = 2000 for the first 10 million tokens, gradually reducing every 10 million tokens. Once the Hada DBank platform launches, HADACoin will be trading on the F1Cryptos exchange the first of many exchange platform partnerships in the pipeline.

New Islamic economy products unveiled in Dubai

The International Innovative Platform for Islamic Economy Products (IIPIEP 2018) took place on 21 February in Dubai. The event was organized by Dubai Airport Freezone Authority (DAFZA) in cooperation with International Center of Islamic Economy (ICIE). The first product launched was the 'Exchangeable Sukuk', which has been created to mobilize resources using Sukuk that are tradable and don’t require the utilization of bank assets. The second product announced was the 'Awqaf Fund' which aims to create a new simple sustainable product for anyone who wants to put their money into waqf. The 'Flexible Credit Card' was the third product launched at IIPIEP 2018, which seeks to combine investment with funding. The customer gets balance in credit and at the same time an investment account. Held at Grand Hyatt Dubai, the event was attended by industry experts, innovators and decision-makers. It was supported by Alinma Bank, Islamic Development Bank and Dubai Islamic Economy Development Centre, sponsored by National Bonds and National Commercial Bank.

Transparency International publishes new Corruption Perception Index Rankings

Transparency International published its annual Corruption Perception Index. The index ranks 180 countries using a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean. This year, more than two-thirds of countries score below 50. With an average of score of 43. In South East Asia, Singapore again leads the way this year as the highest ranked country. The United Kingdom increased its score from 81 to 82. The US moves up to 16th position following a single point increase to their score. The UAE increased it’s score by 5 moving up to 21st place in the index. Malaysia moved down nine places, from 53rd to 62nd on the index. Indonesia also lost 6 places in the index despite scoring the same as last year.

Albaraka Turk raises $205 million via Tier 1 #sukuk

#Turkey's Albaraka Turk has raised $205 million via Tier 1 perpetual sukuk. It has a 10% profit rate, is sold as a private placement and issued through an Irish-domiciled special purpose vehicle. Albaraka Turk previously secured a $213 million murabaha-based loan syndication in April of last year. Malek Temsah, assistant general manager of treasury at Albaraka Turk said the latest transaction could serve as an example for other banks, which had previously issued sukuk as Tier 2 capital only. The lender appointed Standard Chartered Bank as global coordinator for the deal with Bank ABC, Emirates NBD, Qinvest and Noor Bank as lead managers.

Opinion: Global #sukuk market unlikely to repeat 2017 performance

In 2017 the exceptional performance of sukuk was driven by good liquidity conditions, alongside certain countries’ desire to develop their Islamic finance industries. However, the outlook for sukuk in 2018 is more uncertain. According to Mohamed Damak, S&P Global Ratings’ Head of Islamic Finance, tighter global liquidity conditions, mounting geopolitical risks and slow progress on the standardisation of Islamic finance products will continue to hold the market back from its full potential. While sukuk issuance may decrease in 2018, there are a couple of interesting trends. These include the more stringent application of the profit-and-loss-sharing principle supported by several Sharia scholars. The sukuk investor base is broadening, but there is a lack of a specific regulatory framework to protect retail investors.
Dubai Islamic Bank (DIB) has successfully issued a $1bn sukuk with a five-year tenor. It is the first US dollar benchmark sukuk transaction from the GCC in 2018. The issuance emanates from DIB’s $5bn sukuk programme and carries a profit rate of 3.625%. The instrument will carry a dual listing on the Irish Stock Exchange and Nasdaq Dubai.

Agreement Between Islamic Development Bank And UN ESCAP For #Sustainable #Development

The Islamic Development Bank (IsDB) has launched a new digital platform to accelerate progress towards the Sustainable Development Goals (SDGs). The "Engage" platform's launch was announced in London by the President of IsDB, Dr. Bandar Hajjar, Secretary of the UN Economic and Social Commission for Asia and the Pacific (ESCAP), Dr. Shamshad Akhtar, and Dr. Hayat Sindi, Chief Scientific Advisor to IsDB. The platform will focus on six SDGs: achieving greater food security, healthier lives, inclusive and equitable education, sustainable management of water, access to affordable and clean energy, and sustainable industrialisation across the developing world. To ensure its members have access to financing for innovation, IsDB has established a new Fund, called The Transform Fund. It will provide seed money for innovators, start-ups and SMEs, as well as funding partnerships between researchers and entrepreneurs. A Memorandum of Understanding (MoU) was signed between IsDB and ESCAP to work together to achieve sustainable and inclusive development.

DIB lists $1b #sukuk on Nasdaq Dubai

Dubai Islamic Bank (DIB) celebrates the listing of a $1 billion Sukuk on Nasdaq Dubai. The Sukuk is the first benchmark dollar-denominated Sukuk from a GCC issuer in 2018. It is DIB's sixth Sukuk on Nasdaq Dubai, making the bank the largest UAE debt issuer with a total of $5.25 billion. The latest Sukuk carries a profit rate of 3.625% with a five-year tenor. DIB's Group CEO Dr Adnan Chilwan said the master plan developed a decade ago has yielded solid results and the strong demand for the credit continues to grow across a diverse global investor base. He added that Nasdaq Dubai provided high visibility in the marketplace as well as close links to investors in the region and internationally.

#Retakaful sector remains embattled playground for Islamic finance

According to insurance rating firm A.M. Best, retakaful is faced with a challenging environment in a highly competitive reinsurance market. The analysts took a close look at the global retakaful market and found that new companies entered the market, but their success has been limited. Mahesh Mistry, senior director of analytics at A.M. Best, says that companies have limited access to quality business, predominantly resulting from the underperformance of the primary takaful sector. Current leading players in the retakaful market are Malaysia’s ACR Retakaful and Malaysian Reinsurance, Emirates Retakaful, Saudi Reinsurance Company, Dubai’s Takaful Re Limited and Tunisia’s BEST Re, as well as Islamic windows of conventional insurers. It is estimated that the entire business volume does not exceed $1bn in gross written premiums, while the global reinsurance market was valued at close to $600bn at the end of last year. The standalone retakaful model may be under threat over the long term, unless it is repositioned to add additional value to the reinsurance market

Islamic Development Bank aims for $2.5bn Mega #Sukuk

Bandar Hajjar, president of the Islamic Development Bank (IDB), announced that the bank would soon issue its largest sized Sukuk for $2.5 billion. IDB is a regular issuer of Sukuk having last issued in September 2017 with a $1.25 billion issuance which was priced at 2.261%. The bank has recently partnered with China-led Asian Infrastructure Investment Bank (AIIB) and plans to co-finance many projects in Africa. Africa has witnessed a growing share of mostly sovereign Sukuk issuances. Sudan, Gambia, Senegal, South Africa have all issued sovereign sukuk, the latest issuer is Cote d’Ivoire with its inaugural debut in 2015 of USD 260 million.

A transaction apparently complying with Islamic finance rules which dismays most Muslims who look at it

In this article Mohammed Amin discusses a structure which sidesteps Shariah rules but nevertheless was approved by Shariah scholars. He encountered this structure at a recent conference and the paper was titled "The Doomsday Fatwa". The "total return swap" structure would allow Muslims to achieve the same economic returns as investing in any identified asset. For example, a Muslim could achieve the economic results of investing in brewery shares without ever owning them. The "Shariah conversion technology" underlying the transaction appears to violate any purposes which underlie Islamic finance.

Malaysian firm adds Islamic certification to #cryptocurrency

#Malaysia-based firm HelloGold has received a Syariah-compliant certification for its gold-backed cryptocurrency and plans to launch its online gold platform in Thailand. HelloGold's chief marketing officer Manuel Ho said the cryptocurrency product was named GOLDX and received certification from Amanie Advisors. GOLDX involves the issuance of a token backed by physical gold stored in a Singapore vault and transactions must be completed within a defined time period. Over the past year, the firm has also rolled out a mobile app in Malaysia that is based on blockchain. The mobile app, which allows users to buy and sell physical investment grade gold, was also certified by Amanie Advisors. Manuel Ho added that HelloGold would expand its gold platform into Thailand in coming months, while potentially adding a third market by the end of the year.

Gassner's picture

Public Lecture in London, Wednesday 21st February 2018, SOAS University of London 7.00 PM-8.30 PM

Happy to meet in real life! PUBLIC LECTURE ON ISLAMIC FINANCE: The meaning of Shari’ah compliance goes to the heart of Islamic finance and its value proposition.

SOAS University of London
SOAS Main Building, DLT Lecture Theatre
Wednesday 21 February 2018, 7:00-8:30pm

More details in the attached pdf file.

Best regards,

Michael Gassner

Dubai State Holding Firm Is Said to Seek $1 Billion #Refinancing

Investment Corporation of Dubai (ICD) is seeking to raise a $1 billion loan to refinance its existing debt. The state-owned holding company aims to raise a five-year loan to partly repay a $2.55 billion facility that matures in June. ICD owns stakes in some of Dubai’s biggest companies including Emirates, Emaar Properties and Emirates NBD. The company raised the loan in 2013 and it includes a $875 million facility and a 6.15 billion dirham ($1.7 billion) portion. HSBC Holdings, Citigroup, Standard Chartered, Emirates NBD and Dubai Islamic Bank were among lenders that provided the original loan.

Islamic Development Bank joins forces with #China-led AIIB - Financial Times

The Islamic Development Bank (IDB) is set to form a partnership with the China-led Asian Infrastructure Investment Bank (AIIB) to address the large infrastructure gap in developing countries. IDB president Bandar Hajjar said the bank would co-finance many projects with AIIB in the future in Africa to finance infrastructure projects. Co-operation between the AIIB and the IDB is set to create a new force in development finance for several developing countries. Many of the IDB’s 57 member countries overlap with the AIIB’s approved membership of some 80 nations.

#Fintech News from the Middle East and North Africa (MENA)

Here’s a round up of recent fintech news from the MENA region. Saudi Arabia’s central bank has signed a deal with Ripple to use distributed ledger technology to settle payments. Dubai Multi Commodities Centre (DMCC) reports that gold trader Regal RA DMCC is the first company in MENA to gain a licence to trade cryptocurrencies. Honeywell launches Middle East industrial cybersecurity center. International Data Corporation reports that MENA spending on blockchain technology will grow to $80 million this year compared to $39 million in 2017. By 2021, regional blockchain spending is expected to reach $307 million. Monami Tech introduces digital payment service, Lendme, while Monetary Authority of Singapore and Central Bank of Egypt forge fintech partnership.

#Qatar Islamic #Insurance posts gain in gross written premium to QR316.6mn in 2017

Qatar Islamic Insurance has reported more than 1% year-on-year rise in gross written contribution (premium) of QR316.6mn in 2017. The company’s earnings-per-share was QR4.13 compared to QR4.23 a year ago. The policyholders’ surplus registered more than 100% growth to QR16.2mn in 2017 compared to QR7.9mn in the previous year. Chairman Sheikh Abdulla bin Thani al-Thani said the company would distribute, for the eighth consecutive year, 20% surplus to all the eligible policyholders for 2017. The management of Qatar Islamic Insurance achieved these results despite a very challenging environment in 2017 due to negative impact of low oil prices on national economy.

Comic explainer: how does Islamic finance work?

In this comic the University of Queensland’s Mamiza Haq explains the foundations of Islamic fincance and the Dana Gas sukuk case.

Wealth protection and succession solutions for wealth families

Dynastic planning is increasingly topical in the Middle East as founders focus more attention on ensuring that the family remains in harmony. According to Laurence Black, Regional Director at Asiaciti Trust, establishing a structure to manage family dynamics and ensure a smooth transition of assets helps minimise family conflict. As families become more global from their Middle East bases, there are more and more issues to consider. Families are looking further out in wealth transitioning as well, thinking about their personal legacies, such as philanthropic interests. Well-structured dynastic planning helps mitigate dangers that might arise due to political instability or other forms of fragmentation like foreign ownership rules. Cross-border issues are ever more prevalent as asset classes and geographical dispersion become more diverse. Trust structures and other special vehicles are ideal for protecting assets and can maintain control for the principals in their lifetimes.

Islamic legacy planning – evolution or revolution?

The typical GCC merchant family is facing many challenges to the maintenance, expansion and inter-generational transitioning of its wealth. According to Yann Mrazek, Managing Partner at M/HQ, there is some gradual increase in investment outside the region, but nearly three-quarters remains in the region. The focus remains concentrated on only three asset classes, the family’s own business, real estate, cash or deposits. While times are clearly changing and people from the GCC are spreading out further, their assets seem to become more concentrated. Moreover, the UAE economy is more open than ever before, implying greater competition for businesses. All this represents a wonderful opportunity for firms such as M/HQ. An estimated 30% of families are not thinking about estate planning, while 70% are receptive to legacy matters. For those with offshore assets, a trust or a foundation are likely to be compatible. For domestic assets, there are new tools being rolled out in the region. These include new SFO, trust and foundation regimes.

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