BLOCKCHAIN USE CASE IN ISLAMIC SOCIAL FINANCE

Abstract

Purpose — This research explains and reviews two innovative solutions based on blockchain that were used for Islamic social finance (ISF) projects by two separate companies, namely Finterra and Blossom Finance. Policy implications are suggested for the future use of blockchain in innovative financial products for the Islamic finance industry. Design/Methodology/Approach — This is a qualitative research conducted through library research and semi-structured interviews with experts and founders of Finterra and Blossom Finance. Data obtained from published literature and the interviews were accordingly examined and interpreted through content analysis to present the results in this research. Findings — There is rising interest in ISF for economic revival in the aftermath of the COVID-19 pandemic. Innovation through blockchain technology seems to be the future of ISF, hence the need for relevant stakeholders to understand the technology. However, there is a regulatory gap in terms of a proper legal framework to support blockchain-related innovations in ISF and a policy gap in the management of Sharīʿah and legal risks involved in ISF transactions. Originality/Value — This research is original because it explains unique case studies from the source of innovation itself, analyses the hurdles that were present, and offers recommendations for future use of innovative technology in the Islamic financial sector.