Blockchain Technology and Its Impact on Sukuk Structuring in Islamic Finance

Authors

  • Muhammad Ali
  • Ghulam Mustafa
  • Dr. Suman Shaikh
  • Aman Ullah

Abstract

Blockchain technology has emerged as a transformative force in the financial industry, offering transparency, security, and efficiency in transaction processes. Its application in Islamic finance, particularly in structuring Sukuk, has gained significant attention due to its ability to address challenges in compliance, trust, and operational inefficiencies. This study explores the integration of blockchain technology in Sukuk structuring, focusing on its impact on Shariah compliance, cost optimization, and market accessibility. Using a qualitative approach, the research examines case studies of blockchain-enabled Sukuk issuances and evaluates their outcomes against conventional Sukuk structures. The results highlight that blockchain enhances transparency by providing immutable records of ownership and transaction flows, ensuring adherence to Shariah principles. Additionally, the technology reduces issuance and settlement costs by streamlining processes, eliminating intermediaries, and automating contract execution through smart contracts. Blockchain also promotes financial inclusion by enabling smaller-scale investors to participate in Sukuk markets through tokenization, increasing liquidity and accessibility. However, challenges such as regulatory uncertainty, scalability issues, and the need for technical expertise remain significant barriers to widespread adoption.  The findings suggest that blockchain technology has the potential to revolutionize Sukuk structuring, aligning it with the principles of Islamic finance while enhancing operational efficiency and market dynamics. Policymakers, Shariah scholars, and financial institutions must collaborate to address existing challenges and establish robust frameworks for blockchain integration in Islamic finance.

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Published

2025-02-04

How to Cite

Muhammad Ali, Ghulam Mustafa, Dr. Suman Shaikh, & Aman Ullah. (2025). Blockchain Technology and Its Impact on Sukuk Structuring in Islamic Finance. Dialogue Social Science Review (DSSR), 3(2), 81–102. Retrieved from http://thedssr.com/index.php/2/article/view/275

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Articles