In line with the commitment made by Labuan FSA in the Labuan IBFC Strategic Roadmap 2022-2026, the strategic goal of the Islamic Digital Asset Centre (IDAC), is to attract more digital assets and Fintech players to Labuan, and to carve out a niche in the digital Islamic finance space.
This is unique in the world and will provide an alternative platform to the conventional digital finance landscape.
As demand for sustainable finance is on the rise, the delivery of Islamic financial instruments is given a new lease of life, brought about by the advent of Islamic Fintech or the digital delivery of Islamic finance.
First of its kind in this world?
Labuan IBFC is envisaged to play a significant role as a fundraising and investment hub in the global digital space, with a niche in ESG and Shariah-compliant activities.
The unveiling of IDAC is timely, to serve as a complete digital ecosystem, bringing together technology-driven solutions in terms of fundraising and promoting economic development in other sectors within Islamic finance, potentially making Labuan the digital gateway with Islamic finance capabilities for all types of global investors and players.
Labuan IBFC is underpinned by a comprehensive set of laws and regulations governing Islamic financial services under a separate Labuan Islamic financial services and securities Act, alongside the conventional counterpart.
Labuan FSA has been proactive in developing new regulations that integrate Islamic finance, ESG agenda and digital financial innovations, and the issuance of guidelines such as the Guidance Note on Issuance of Green, Social and Sustainability Sukuk, aimed at creating a more dynamic and robust ecosystem for Sukuk issuance.
Digital Assets
In the future, Labuan FSA will continue to roll-out relevant guidelines on digital assets, ESG and Islamic finance to further enhance the governance of the centre. In addition, the Shariah Supervisory Council of Labuan FSA has issued a pronouncement on the minimum compliance criteria for offering Labuan Islamic digital-based solutions, highlighting the Shariah permissibility for such offerings in the Labuan IBFC.
Under IDAC, the availability of virtual listing using blockchain technology and smart contract have enabled global investors who are looking for new asset classes including ESG and Shariah-compliant investment products, to look to Labuan IBFC for raising funds via securities token offering (STO).
Labuan Islamic/ESG Digital Exchange
The recently launched first Shariah-compliant ESG-based digital exchange (Labuan Exchange) will focus on tokenisation of securities including digital sukuk, allowing for immediate buying and selling of securities through its integrated blockchain technology solution and support from a comprehensive ecosystem. It augurs well for Labuan IBFC to create a competitive market environment as a fundraising and investment hub in the digital space.
Since 2017...
Labuan FSA licensed its first digital finance-related entity in 2017, and has since expanded with a wide range of digital businesses and players operating in the Labuan IBFC digital space.
The Centre is now home to more than 90 digital financial services providers including digital asset platforms, fintech funds, digital banks, insurtech, digital token issuance, and licensed digital securities exchanges using blockchain technology.
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