Blockchain network HAQQ reveals plans for gold-backed stablecoin, tokenised sukuk to boost Islamic interbank market

It is also set to launch a tokenised sukuk, a Shariah-compliant bond, whose global market size is projected to cross the $1 trillion mark this year.

HAQQ’s gold-backed stablecoin will cater to the Islamic interbank market via the Tawarruq platform, offering tokenised commodities as a more efficient alternative to traditional Shariah-compliant interbank financing.

“We’ll also be collaborating with Shariah-compliant institutions and asset owners to tokenise their offerings,” Alex Malkov, Co-founder of HAQQ Network, told Arabian Business.

“We’ll ensure all tokenisation processes comply with Islamic values and principles. This might involve Musharakah or eliminating interest-based mechanisms like Riba,” he said.

Malkov said HAQQ is currently working on obtaining the necessary licenses and approvals to operate within regulatory frameworks for issue of the proposed stablecoins and sukuk.

Gold-backed Islamic stablecoin

Malkov said digitising instruments like sukuk on HAQQ’s blockchain platform could bring unprecedented efficiency and transparency to this massive market.

Similarly, the gold-backed token will be a significant milestone for the Islamic financial ecosystem, establishing a direct link between the digital and physical worlds.

“Each token will be tied to gold – a tangible asset, minimising speculation and naturally avoiding interest accrual, which aligns perfectly with Islamic financial principles,” he said, adding that accessible through the HAQQ Wallet, this stablecoin will bring financial inclusion and eliminates unnecessary costs for users.

“They can utilise this token for transactions within the HAQQ ecosystem, which could include purchases within Shariah-compliant online marketplaces or using DeFi apps built on our platform,” the HAQQ Network Co-founder said.

The move is expected to enable online marketplace purchases for over two billion Muslims worldwide.

Industry experts said HAQQ’s move to offer a modern solution through tokenised commodities could offer a viable alternative to traditional interbank transactions.

Malkov also revealed the network’s plans to extend its stablecoin offerings to the capital market.

“With an eye on the future, we plan to broaden its offerings to potentially include tokenised securities,” he said.

Partnering for market reach

Malkov said the network’s move to issue a slew of stablecoins followed its assessment that the market is currently ripe for such products.

“We see immense potential in tokenising real-world assets due to the market maturity and technological advancements in the last few years.

“This allows for fractional ownership, increased liquidity, and efficient trading,” he said.

Malkov also pointed out that Islamic investment structures like Mudarabah and Musharakah can be executed seamlessly through the platform while adhering to Shariah principles.

“So, if we’re talking about our plans for the market, well, firstly, it’s partnerships.”

The HAQQ Co-founder said the Network will first develop new products – that cater to the specific needs of the Islamic finance community, and widen the market reach for the products by striking a series of partnerships.

“We understand the diverse needs of global Islamic markets. We’re committed to localisation efforts, translating our platform and marketing collateral into multiple languages and adapting offerings to cater to regional regulations and financial practices,” he said.

Malkov said the HAQQ Network’s aim is to bridge the gap between the Islamic finance sector and the innovative world of blockchain tech.

“Our next goal is to provide our customers with greater control over their finances and access to a wider range of Shariah-compliant financial instruments.

“We’d also like to drive financial inclusion for unbanked or underbanked populations within the Muslim community,” he said.