Infinity Blockchain Ventures Malaysia has signed an agreement with Masryef, a Shariah advisory firm based in the same country, to create solutions for Islamic banks based on distributed ledger technology (DLT).
According to a report by Salaam Gateway, the partnership will see Masyref advise IBV Malaysia’s to ensure its blockchain solutions are compliant with Sharia or Islamic law.
Khairil Anuar Mohd Noor, principal of Masryef Management House, said in an interview with Salaam Gateway that the partnership aims to reduce the cost of doing business for Islamic banks. However, these benefits also extend to reducing the potential for fraud by taking the human element out of the equation.
“Most of the Islamic products out there are still being managed by humans, systems are being run by people, who can turn bad and not follow the code of ethics. Blockchain gives us a system that is as smart as people,” said Khairil Anuar.
He said that by executing smart contracts on the blockchain, “you can very easily track your money and the use of it through them.” In the case of Islamic banking, this can be useful for preventing haraam or any financing deemed sinful in the Islamic faith.
Cris D Tran, Managing Director for Infinity Blockchain Ventures Malaysia, has conceded that the rules and standards of Sharia banking are complex and that “you can’t simply make up a product in Islamic finance.”
Regardless, he believes that Malaysia will need to consider DLT if it is to retain its leadership in Islamic fintech. Tran revealed that Infinity Blockchain has also partnered with Universiti Malaya to conduct a study on how blockchain can be applied to Islamic finance.
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