Blockchain Technology – Towards Complementing the Structuring of Sukuk: A Literature Review

Abstract

Blockchain is a new innovative technology that offers various benefits to society because it can be applied in various industries, including the financial industry. Several issues have arisen concerning sukuk practices in Malaysia, some of which are default payments, ambiguous risks, publishing process, lengthy transactions and high costs. In line with the digitalisation era, blockchain technology has the capability to improve the present sukuk structure in Malaysia by applying its characteristics to make the sukuk structure more efficient because sukuk plays an important role in a nation’s development and progress. However, sukuk is vulnerable to various risks. Therefore, this study is a preliminary survey aimed at identifying issues pertaining to sukuk, capability of blockchain technology and how this technology can complement the structuring of sukuk in Malaysia. This qualitative literature review study used the document analysis method to collect data. Findings show that the blockchain technology’s characteristics enables it to improve the structure of sukuk as well as complement and become a new addition to the Islamic capital market in Malaysia. This study hopes to contribute to the existing corpus of knowledge in all levels of society, especially those directly involved in sukuk, so that the sukuk market continues to expand with the times as well as contribute to the nation’s progress and comply with Shariah principles.