Latest news with #AAOIFI
Zawya
7 days ago
- Business
- Zawya
Global sukuk issuance to dip in Q3 after $1 trillion milestone
Global sukuk issuance is likely to slow in the third qaurter with seasonal summer trends in key issuing markets, following a strong first half where global volumes surpassed the $1 trillion milestone for the first time, according to Fitch Ratings. The sukuk market's credit profile 'remained broadly robust, despite a period of geopolitical conflict in the Middle East, as 80% of Fitch-rated sukuk are investment grade and 87% of issuers have a Stable Outlook, stated Fitch in the 'Global Sukuk Monitor 1H25' report. On the issuance side, after a brief pause, sukuk rebounded swiftly as tensions eased,' says Bashar Al Natoor, Global Head of Islamic Finance at Fitch Ratings. Issuance is likely to pick up again in 4Q25, 'on rising Islamic investor demand, funding diversification, refinancing, budget needs and government support for Islamic finance growth.' The Accounting and Auditing Organization for Islamic Financial Institutions is revising the draft shariah standard no. 62, with few regulators already addressing the sukuk asset registration requirements. The UAE central bank's Higher Sharia Authority (HSA) issued a resolution on the sale of rights over tangible assets with no requirement to register, which is likely to maintain market stability. Ras Al Khaimah's recently issued sukuk (rated 'A+') had a registration exemption for real-estate ijara assets by decree, as promulgated by the HSA, stated the top ratings agency. According to Fitch, sukuk penetration in emerging markets (EM) is rising, at over 16.5% of all EM US dollar debt issued in Q2 (excluding China; versus 2024: 12%). Recent landmark issuance included the largest-ever 'AA' rated corporate sukuk issued by ADNOC Murban RSC, Egypt returning to the sukuk market (rated 'B'), and Jordan's debut dollar sovereign sukuk (sukuk unrated). GCC Islamic and conventional banks remain crucial as both issuers and investors, with ample liquidity. A few UAE banks started offering fractional sukuk, enabling greater retail participation. Lower oil prices (2025F: $70/bbl; 2026F: $65/bbl) may encourage GCC sukuk and bond issuance. The anticipated single US Federal Reserve rate cut in 4Q25 (2025F: 4.25%; 2026F: 3.5%) could boost issuance. However, risks remain such as new sharia requirements, geopolitical escalations and oil-price shocks. -TradeArabia News Service Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (
Time of India
11-07-2025
- Business
- Time of India
Explained: Is crypto Shariah-compliant? Binance launches Islamic finance-aligned investment platform
Sharia Earn is live in 29 countries like the UAE, Saudi Arabia, Egypt, and Indonesia, bringing faith-compliant crypto investing to major Muslim markets./ Image: Binance TL;DR What: Binance has launched Sharia Earn , a crypto staking platform structured under Islamic finance principles. Why: Certified Shariah-compliant by Amanie Advisors under AAOIFI standards. How: Uses wakala contracts to avoid riba (interest), gharar (excessive uncertainty), and prohibited sectors. Where: Available in 29 countries including the UAE, Saudi Arabia, Egypt, Indonesia. Impact: Offers millions of Muslim investors access to crypto investing that aligns with their faith-based financial requirements. Crypto Meets Shariah: The Big Question On July 10, Binance, the world's largest cryptocurrency exchange by volume, unveiled Sharia Earn, a first-of-its-kind crypto investing platform tailored for Muslim investors. Now live across 29 countries, including the UAE, Saudi Arabia, Egypt, Indonesia. The launch is not just a regional experiment. It is a structured effort to align modern crypto products with the ethical and legal foundations of Islamic finance. At the heart of the offering is a long-standing question: can digital assets coexist with Shariah law? With formal certification from Amanie Advisors, a globally respected Shariah advisory firm, Binance believes they can. For many of the world's 2 billion Muslims, who have remained cautious about crypto due to religious concerns, this signals a potential shift – not just in access, but in trust. What Is Shariah Law and How Does It Shape Finance? Shariah, meaning 'the clear path,' is not merely a set of rules. It is a comprehensive moral and legal framework that guides many aspects of a Muslim's life, including economic behaviour. Under Islamic finance, profit and ethics go hand in hand. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Upto 15% Discount for Salaried Individuals ICICI Pru Life Insurance Plan Get Quote Undo Three Core Principles in Islamic Finance No Riba (Interest): Any fixed return on money lent is forbidden. Money cannot earn profit without effort or risk. No Gharar (Excessive Uncertainty): Transactions must be transparent, avoiding excessive speculation, ambiguity, or contractual asymmetry. No Haram (Prohibited Sectors): Investments cannot be linked to alcohol, gambling, pork products, adult content, or weaponry. The source of profit must be permissible. Islamic finance aims to promote fairness, social justice, and shared prosperity, ensuring wealth circulates rather than accumulating unfairly in a few hands. What Makes an Investment Shariah-Compliant? Shariah investing is essentially ethical investing with a religious lens. Beyond excluding haram industries, the structure of the financial products matters just as much. Modern Islamic finance isn't just theological theory. It has evolved into a multi-billion-dollar global industry, providing structured investment pathways for Muslims to grow wealth without compromising faith.S Shariah-compliant investing today includes: Real estate and asset-backed investments Sukuk – often called 'Islamic bonds,' these instruments do not pay interest but instead grant investors partial ownership in a tangible asset, with earnings tied to its real-world performance. Equity Funds and Mutual Funds – These are curated to exclude non-compliant sectors. For example, the Amana Growth Fund (AMAGX), launched in 1994, invests at least 80% in Shariah-compliant common stocks. As of 2017, it managed $1.7 billion in assets nearly half of it in technology companies, with a modest $250 minimum investment. Index Funds – Global benchmarks such as the S&P 500 Shariah Index filter out companies involved in prohibited activities. As of October 2017, it included 235 companies, with information technology making up 38% of its weighting. Other indexes include: S&P Global Healthcare Shariah S&P Global Infrastructure Shariah S&P Developed Large & Mid Cap Shariah S&P Developed Small Cap Shariah S&P Developed BMI Shariah Wealth redistribution is also integral. A portion of wealth, typically 2.5% annually, is paid as Zakat, akin to a charitable tax, meant to support those less fortunate. The Growth of Shariah-Compliant Funds, A Global Financial Force Though the idea of Islamic investing took root in the late 1960s, it wasn't until the early 2000s that the industry accelerated. A 2011 report by PwC showed that Shariah-compliant funds grew at an annualized rate of 26% in the first decade of the century. Between 2002 and 2003, surging petrodollar liquidity and maturing GCC capital markets gave Islamic investors both the resources and access to make their mark. By Q1 2017, global Islamic assets under management reached $70.8 billion, according to the Malaysia Islamic International Financial Center. By the end of Q1 2017, global Islamic assets under management (AUM) stood at $70.8 billion, according to the Malaysia Islamic International Financial Center. What Is Binance? Binance is the world's largest cryptocurrency exchange by trading volume, with over 280 million users globally as of 2025. It offers a wide range of financial tools , including spot and futures trading, staking, and digital wallets, and has played a major role in driving mainstream adoption of crypto. With its technical scale and institutional backing, Binance is one of the few platforms capable of launching faith-aligned financial products globally. Its latest initiative, Sharia Earn, brings halal crypto investing into the digital finance space. Introducing Sharia Earn On July 10, 2025, Binance officially launched Sharia Earn, the world's first fully Shariah-compliant multi-token crypto staking platform. Developed in collaboration with Amanie Advisors, a leading Islamic finance consultancy headed by Dr. Mohd Daud Bakar, Sharia Earn is certified under AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) standards. How Sharia Earn Works Sharia Earn offers crypto rewards through Binance's existing staking infrastructure, structured to meet Shariah-compliance standards. Key Features: Wakala Agreement: Binance acts as an agent under a wakala contract (an Islamic agency contract where users authorise Binance to manage funds on their behalf without guaranteeing fixed returns), deploying funds only into pre-screened, compliant blockchain protocols. Supported Tokens: BNB (Simple Earn Locked Products) Users earn halal rewards daily at a variable rate, paid directly to their Spot Wallets. Rewards are generated on-chain, and users retain full visibility and control. Early withdrawals are allowed but will forfeit accrued rewards. ETH & SOL (Liquid Staking) Users receive WBETH or BNSOL upon staking, which represent both the staked asset and earned halal rewards. These tokens increase in value over time, reflecting the staking rate of return. They can be redeemed anytime for ETH or SOL, including all accrued value. Rate of Return (ROR) The expected Rate of Return (ROR)* for each token is based on on-chain staking yields: For BNB, it mirrors the rate used in Simple Earn Locked Products. For ETH and SOL, the ROR is reflected in the value growth of WBETH and BNSOL. All reward mechanisms have been reviewed and approved by Sharia scholars to ensure full compliance with Islamic finance principles. *Note: In Islamic finance, "Rate of Return" (ROR) is used instead of APR to reflect halal, expected earnings from permissible activities. Is Crypto Shariah-Compliant? Whether crypto is halal in Islam depends on how it is structured and used. To be Shariah-compliant, it must avoid riba (interest), gharar (excessive uncertainty), and involvement in haram (prohibited) industries. Binance's Sharia Earn serves as a clear example of how crypto can meet these conditions. The platform uses a wakala contract, where Binance acts as an investment agent rather than a lender or borrower, ensuring returns are not fixed or guaranteed. All participating assets are screened to exclude ties to haram sectors like gambling, alcohol, or conventional finance, while the risks and returns are transparently outlined to eliminate gharar. Certified by Amanie Advisors and reviewed quarterly under AAOIFI standards, Sharia Earn shows that when properly structured, can indeed be halal. FAQs: Q: What is Sharia Earn by Binance? A Shariah-compliant crypto staking platform offering halal returns through ethical blockchain protocols. Q: How is it different from regular crypto staking? It follows Islamic finance rules, avoiding interest, excessive risk, and prohibited industries. Q: Is it certified as halal? Yes, certified by Amanie Advisors under AAOIFI guidelines. Q: What tokens are supported in Sharia Earn? Currently BNB, ETH, and SOL through Sharia-approved staking models. Q: Can I withdraw my staked crypto early? Yes, early withdrawals are allowed, but some rewards may be forfeited depending on the product.
Zawya
09-07-2025
- Business
- Zawya
Sukuk issuances: AAOIFI unlikely to implement Standard 62 this year
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the leading standard-setting body for Islamic finance, is unlikely to issue its new Standard 62 guideline for sukuk structures this year. The much-debated standard, designed to differentiate sukuk structures from conventional bonds to meet Shariah compliance, may see the light of day only early next year, market participants aware of the matter told Zawya. 'AAOIFI has postponed the implementation of Standard 62, and it may now take place next year. The sukuk markets are currently on much calmer ground,' the head of DCM at a leading MENA bank told Zawya. Islamic bonds in the MENA region raised $32.2 billion during the first half of 2025, marking a 14% increase from the same period last year and setting a new first-half record. Sukuk accounted for 37% of total bond proceeds raised in the region during H1 2025, compared to 38% in the first six months of 2024, according to data from LSEG. The world of Islamic capital markets is anxiously awaiting the final version of Standard 62, which in its draft exposure emphasised ownership transfer of assets and asked for detailed treatment on hybrid sukuk as well as Tier-1 and Tier-2 capital sukuk. The Bahrain-based AAOIFI, which includes around 20 senior Shariah scholars announced that new measures will be introduced this year, with a transitional period of one to three years for issuers to adapt. The exposure draft was published in December 2023, giving market participants until the end of July 2024 to provide feedback. The standard-setting body is now conducting roundtables and industry events on Standard 62. Market disruption However, experts warn that if Standard 62 is approved as proposed, it could be disruptive for the market and Islamic banks. 'The final version is unlikely to be implemented in 2025. The changes suggested by AAOIFI under the draft Standard 62 would entail a significant deviation from the current practices,' the investments head of a leading Shariah-compliant bank based in Qatar told Zawya. 'AAOIFI is aware of the implications, but they won't shy away from making changes just because it may negatively affect the industry,' he added. 'Ownership transfer must be genuine and enforceable, not superficial. In structures requiring ownership transfer, sukuk holders must have genuine recourse to the underlying assets,' AAOIFI told Zawya. However, it did not comment on whether Standard 62 will be implemented this year or delayed. Global credit rating agency Fitch said there remains a lack of clarity around the standard's final scope and implementation. 'The standard has not reduced Islamic banks' ability to issue, invest in and arrange sukuk, but these remain risks to watch,' it said. 'In its draft proposal, the vast majority of Standard 62 is not controversial and is already being applied in the market. But there is a minority portion regarding asset transfer and legal title transfer within the standard [which is] causing an issue,' the head of Islamic finance at a leading UAE bank told Zawya. According to him, Standard 62 will significantly change how sukuk are commonly structured and perceived with a clear distinction. 'If Standard 62 is passed as it is, it will change the nature of sukuk from an unsecured form of financing to securitisation. Alternatively, if securitisation is not preferred by the issuer, it will need to remain as unsecured financing. This represents a significant change in the nature of the instrument compared to what we are used to today.' Change in risk profile 'What AAOIFI is saying is that the asset needs to be effectively transferred from the balance sheet of the issuer to the investors. And that could impact the market in several ways,' Mohamed Damak, Managing Director at S&P, said. Sukuk issuance could be difficult for some issuers that cannot transfer assets freely. There are also concerns about who will bear the expenses of transferring the asset. 'For instance, issuers need to have a specific law or abide by specific rules when it comes to privatisation of sovereign assets before being able to transfer that,' Damak said. In some countries in the Middle East, not all assets can be owned by private investors. Though rules are being relaxed in the region, there are many countries where real estate assets cannot be owned by foreign investors. While some sukuk investors may not want to take on the credit risk exposure of the issuer, some issuers may prefer to keep their assets and refinance on the capital market to raise long-term financing. 'Also, if you transfer the asset from the sponsor of the sukuk to the investors, it will mean that the investors would be exposed to risks related to the asset. These risks could include the pricing of the asset, issues related to the destruction of the underlying asset, or risks related to the nationalisation of the underlying asset, which investors are generally not exposed to,' Damak said. As Standard 62 proposals call for real transfer of the asset and thereby an exposure to the market value of the asset to the investors, it could change the nature of the sukuk, which resembles a fixed income instrument, to an equity-like instrument. The investor profile and the parameters of pricing would also undergo a change. 'If sukuk becomes like an equity instrument, you would be speaking to investors who [...] would be more demanding in terms of pricing in order to compensate for the additional risk to which they are exposed,' Damak said. The level of AAOIFI standards adoption varies across Islamic finance jurisdictions. Malaysia, Saudi Arabia, and Indonesia collectively account for more than 70% of annual sukuk issuance, but AAOIFI standards are not compulsory in these jurisdictions. Impact on UAE, Bahrain sukuk issuances More than 20 jurisdictions have adopted AAOIFI standards, including Bahrain and the Higher Shariah Authority in the UAE. This means that any UAE-based issuers who want to tap the sukuk market, or any issuer worldwide who wants to issue a sukuk and engage with UAE investors, must comply with these standards. While Malaysia, the largest Islamic economy, as well as Indonesia and Saudi Arabia, have not fully adopted AAOIFI standards, they will need to comply if they wish to issue sukuk and attract UAE investors. 'The immediate impact will initially be observed in the UAE and Pakistan, where AAOIFI standards are mandatory. The implications will be determined based on whether the standard is passed in its current form, the regulators' stance and approach to implementation, and how market players adapt to these decisions,' said Jinan Al Taitoon, a sukuk expert at LSEG. 'Introducing amendments that account for the practicalities of the sukuk market, such as offering exemptions, alternative treatments for specific underlying assets, or suggested modifications to sukuk structures, could help mitigate these implications,' Al Taitoon added. Impact on Islamic banks? 'The new standard will be a means of greater harmonisation across jurisdictions, leading to a more robust and streamlined sukuk market,' AAOIFI said. If the adoption of Standard 62 disrupted sukuk issuance, it may affect some Islamic banks' overall funding and liquidity profiles. It could also raise Islamic banks' cost of funding. Demand, including from international investors, could be affected if it makes sukuk less comparable to conventional bonds, according to Fitch. Banks in the UAE and Bahrain are already assessing how the standards will impact their business and are exploring alternative options. 'It's the readiness of the markets to adapt that matters,' an Islamic banker said. 'All the banks know what is going to come, and they have discussed it with issuers. The onus falls on the issuers to change their documentation to apply Standard 62. Banks can help issuers with what needs to be done,' he added.
Daily Tribune
08-07-2025
- Business
- Daily Tribune
Global Praise for Stablecoin Rules
TDT | Manama Bahrain's new stablecoin framework has received a major endorsement from Fitch Ratings, with the agency's Global Head of Islamic Finance calling it a landmark model for the region's digital economy, especially in the Sharia-compliant space. Bashar Al-Natoor praised the Central Bank of Bahrain's (CBB) initiative as a forward-looking move that strengthens the Kingdom's bid to remain a progressive financial hub in the GCC. Sharia-first standards What distinguishes the Stablecoin Issuance & Offering (SIO) Module, Al-Natoor said, is its clear guidance for both conventional and Islamic digital assets. He highlighted the inclusion of AAOIFI standards and independent Sharia advisement as a precedent rarely seen in global frameworks. He said the approach could help build deeper market trust and support compliance among faith-based and ethical investors. Investor confidence boost Al-Natoor said Bahrain's framework is not just about regulatory control but a catalyst for innovation. He expects the rules to encourage new digital products and cross-border activities by providing businesses and consumers with safer access to tokenised assets. The framework also introduces full transparency for yield-bearing stablecoins. While conventional issuers may offer passive income from interest, Sharia-compliant issuers must draw returns from activities permitted under Islamic law. Bahrain's fintech play The move comes as Bahrain continues to expand its Islamic fintech base, supported by regulations that enable services such as crypto-asset platforms and buy-now-pay-later solutions. Al-Natoor noted that while challenges remain, including cybersecurity and supervision, the framework's alignment with global reporting standards could help attract institutional partnerships. The module requires stablecoin issuers to prepare financial statements under either International Financial Reporting Standards (IFRS) or AAOIFI, depending on their compliance route. 'This framework not only underscores Bahrain's leadership ambitions but may also bring clarity and confidence for stablecoin investors and issuers,' Al-Natoor said.
Gulf Insider
07-07-2025
- Business
- Gulf Insider
Bahrain: New Stablecoin Standard To Fuel Islamic Fintech, GCC Crypto Growth
When the Central Bank of Bahrain (CBB) unveiled its new regulations for licensing stablecoin issuers—covering fiat-backed crypto in BHD, USD, or other currencies—it marked a milestone. Fitch Ratings spotlighted the real standout—the framework's pioneering inclusion of Sharia compliance, positioning Bahrain as a digital finance leader in the GCC. Fitch's Bashar Al‑Natoor, Global Head of Islamic Finance, praised the CBB for 'governance foresight in establishing clear guidelines for both conventional and Sharia‑compliant digital assets.' He noted: 'It is particularly encouraging to see explicit references to Sharia compliance… requirements for independent Sharia advisement and AAOIFI standards… building greater market trust.' By explicitly referencing AAOIFI standards and mandating audited financials under IFRS or AAOIFI, the CBB is not only aligning with global norms, but also catering to ethical and faith-based investors—a critical asset in the Muslim-majority region. Fitch sees the framework as a catalyst for new digital services and regional collaboration. According to Al‑Natoor: 'This could spark new digital products and cross‑border activity… offering greater, safer access to digital assets with regulatory guardrails.' By enabling stablecoins to be used across borders—with clear oversight—Bahrain stands at the forefront of a more interconnected Gulf digital economy. A standout feature of the framework, Fitch highlights, is its emphasis on transparent treatment of yield-bearing stablecoins. While conventional issuers may offer passive interest, Sharia-compliant stablecoins must limit returns to permissible asset sources, aligning with Islamic finance principles. 'This distinction could attract broader participation from ethical and faith-based investors,' said Fitch. Such clarity could draw new institutional interest, particularly from ESG-focused funds seeking faith-aligned investment products. Fitch believes Bahrain's framework sets a strong example for its neighbors. It sends a clear signal that comprehensive stablecoin regulation, especially with religious sensitivity embedded, is possible in emerging markets. Yet, Al‑Natoor cautioned that successful rollout will demand robust execution: 'Adapting to new supervisory expectations, managing operational risks, enhancing cyber resilience, and keeping pace with digital transformation' will all be essential post-launch. Fitch's analysis affirms what many in the financial industry have noticed: Bahrain's stablecoin regulation isn't just tabling rules—it's setting a new standard. By combining Sharia oversight, investor transparency, and institutional-grade governance, Bahraini regulators are positioning their country as a pioneer in Islamic digital finance—and a model for the GCC.
