Fusang Exchange achieves tokenisation of digital sukuk
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Fusang Exchange achieves tokenisation of digital sukuk 30 October 2023Malaysia Reporter: Carmella Haswell
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Fusang Exchange, a global digital stock exchange built to enhance traditional finance, has tokenised and listed a digital sukuk.
It aims to revolutionise the Islamic investment landscape by providing investors with access to shariah-compliant high-quality liquid assets (HQLA).
According to the exchange, the tokenisation exercise is the ‘world’s first’ digitalisation of an institutionally-issued sukuk.
In addition, the digital sukuk represents the corresponding underlying sukuk issued by the International Islamic Liquidity Management Corporation (IILM).
Fusang led the tokenisation and listing exercise by using its proprietary Fusang Depository Receipt (FDR) structure to ‘wrap’ the underlying sukuk into digital form.
FDRs represent a ‘beneficial interest’ in an underlying security, which can then be listed, traded and settled on the Fusang Exchange, the firm explains.
Commenting on the announcement, Fusang Exchange CEO Henry Chong says: “Fusang’s next-generation tokenisation technology and standardised legal framework has created the world’s first truly global digital stock exchange.
“Our institutional-only digital infrastructure is built to serve, not disrupt, traditional financial intermediaries by enabling trading, custody and clearing of tokenised assets through a fully-regulated ecosystem.”
Nik Mohamed Din Bin Nik Musa, director general, Labuan Financial Services Authority, adds: “We are excited to see emerging technologies harnessed within a regulated environment, driving innovation in Islamic finance.
“We envisage that the new guidelines on Labuan Securities Token Offering would further spur the development of tokenised securities in Labuan. Leveraging on Labuan IBFC’s robust regulatory environment, Fusang Exchange’s innovation has provided the platform for listing of a unique tokenised structure cementing Malaysia's role in Islamic digital financial services.”
He adds that the issuance bodes well with the recent Budget 2024, providing full tax exemption on Islamic Finance transactions by Labuan entities aimed at positioning the jurisdiction as an Islamic finance hub.
Kelvin Ung, president of Fusang, indicates that the firm will continue to issue similar tokenised securities backed by government-linked assets, as it believes demand for HQLA will continue in the current high interest rate environment.
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