The Delta Summit in Malta brought together the blockchain community which is said to be the first kind of its sort given that Malta is the only jurisdiction in the world that is regulating Virtual Financial Assets and Innovative technologies.
During the panel entitled “Islamic Finance and Blockchain” it was announced that a steering committee is evaluating various Islamic Finance Products that can be made accessible through blockchain and regulated under Maltese Law. The main item being discussed was the implementation of an Islamic Microfinance product that will see a revolution in the Islamic Microfinance industry and which is said to circumvent the difficulties that in many circumstances Islamic Microfinance has faced.
The project which is spearheaded by the Malta Islamic Finance Association (MIFA) and ASSAIF Italia who envisage the reduction in costs for subscribing to the various financing contracts such as Murabaha, Mudarabah and Musharakah. Through the mechanisms of instruments such as smart contracts as well as algorithms that will be certified by Shariah Scholars, the project foresees the substantial reduction of costs including continuous Shariah compliance.
Through the project investors can rest assured that their money will only be used for Shariah compliance products and cannot be used in any other way. This shall be achieved in two ways that is through smart contracts that shall ensure automatic shariah compliance and through the launch of a coin that cannot be used for haram products or services. This automation will reduce the shariah compliance costs and also administration costs which will ensure that it is more accessible to those in need.
Reuben Buttigieg, President of MIFA,stated that this is just the beginning of various projects that MIFA will be launching. It is now the time that Malta truly becomes the Islamic Finance hub that it ought to be , he said. Blockchain may be used in order to ensure better utilisation of Islamic funds and ensuring that no capital is left dormant, capital that can be used to help people in need. In this context, projects related to Zakat, Islamic philanthropy, Islamic inheritance matters and also Waqf are being studied.
Alberto Brugnoni, President of ASSAIF, said that the Islamic Microfinance Fund has been a project in the pipeline for a number of years as ASSAIF has been working on similar products intensely for the common good of people around the world. The distributed ledger technology known as DLT, as regulated in Malta, has given the instrument to render this project even more possible, he stated.
MIFA is the first and only national body of its kind created by statute and endorsed by the Maltese Government. MIFA was officially launched on 26th June 2018 by the Parliamentary Secretary for Financial Services and Digital Economy & Innovation, Hon. Silvio Schembri. MIFA liaises with governments, quasi-governmental institutions, multilateral organization, standard setting bodies, agencies and regulatory authorities for support towards its goals.
ASSAIF, ASSAIF (SRL) and NSdV provide advisory services to multilateral development banks, governments, central banks, foundations, and public institutions on the interlinkages of the principles of ethics, profitability and sustainability. ASSAIF particularly focuses on the role that asset-backed and interest-free financing may play in the transformational changes that are affecting the global financial system. ASSAIF operates on a projects-basis model by assembling core teams of practitioners expert in the legal, fiscal, administrative, financial, and marketing areas.