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Blade Labs, a Qatari tech company, has launched a platform for tokenizing Murabaha contracts, a type of Islamic finance. This innovation allows for broader access to Sharia-compliant financing, both for financial and non-financial institutions.
Tokenized Sharia-Compliant Contracts
Blade Labs, the Qatar-based tech company focused on blockchain and Web3, recently unveiled a platform for tokenized Islamic finance contracts also known as Murabaha contracts. This platform will reportedly enable lenders to target a wider customer base without violating Sharia principles.
According to a report, the financial innovation also creates opportunities for non-financial institutions while ensuring secure and tokenized transactions for lenders. In addition to boosting operational efficiency and accessibility, the innovation enables the integration of these institutions’ financing solutions with their services, the statement added.
In a traditional Murabaha contract, an Islamic financial institution purchases an asset and then sells it to a customer at a markup. However, when tokenized, a Murabaha contract is divided into smaller tokens, allowing for fractional ownership and investment.
“As part of the Qatar FinTech Hub (QFTH) 2024 Cohort, we at Blade Labs are transforming Sharia-compliant financing with our blockchain-powered platform for tokenized Murabaha contracts,” Blade Labs said.
According to the report, the tech company’s platform allows non-financial institutions, such as car agencies, to offer Sharia-compliant financing options to customers. This helps these institutions overcome liquidity constraints and provide in-house financing for goods and services.
For Islamic financial institutions, the Murabaha contracts potentially expand their reach, creating new revenue streams within the Sharia framework. By leveraging blockchain technology, Murabaha contracts can optimize operations, enhance capital efficiency, and expand access to Sharia-compliant financing. This development has the potential to revolutionize Islamic finance both domestically and internationally, the report said.