TideiSun Group (iSunOne) has secured the support of the Malaysia Productivity Council (MPC) to build an Islamic financial system on the blockchain, which IFN Fintech has learned, would involve a Shariah compliant virtual bank.
The partnership between iSunOne and MPC is significant as it represents the first time a Malaysian government agency has publicly voiced its support for a private company in providing Muslim-friendly financial services powered by blockchain technology.
“MPC will promote iSunOne in the Malaysian financial industry, including banks, payment sectors, securities trading firms, and the Malaysian government. MPC will arrange proof-of-concept trials and technology testing for suitable solutions,” Chua Tian Chang, the chairman of MPC, said. It is also understood that the government agency, established as a joint project between the United Nations Special Fund and the Malaysian federal government, will allocate funding for this project.
Based in Hong Kong with an office in Kuala Lumpur, iSunOne provides digital financial services including e-wallet, payment, and asset management. Its debit card service is used by 150,000 users.
The company’s Islamic finance strategy revolves around establishing an Islamic digital bank utilizing blockchain technology. According to a document viewed by IFN Fintech, the proposed bank would offer payment solutions, crypto trading, asset management services as well as debit card facilities among others. The firm is also looking at integrating its existing products (for example, TideBit, its digital exchange platform) to provide a peer-to-peer financing solution.
“The talks are at very initial stage though since our product needs to be fine-tuned,” a spokesperson for iSunOne informed IFN Fintech.
Tweaking its products aside, iSunOne would also need to grapple with regulatory requirements, which could prove tricky as its proposition involves activities that are regulated by both the central bank (digital banking, payment) and securities commission (peer-to-peer financing, crypto trading). It would also be competing with a number of institutions for an Islamic digital banking license. IFN Fintech previously reported that at least 10 have expressed interest, with two targeting Shariah compliance. Bank Negara Malaysia expects to finalize regulations on digital banking by December.
This is not the first initiative to establish a blockchain digital Islamic bank: Hada DBank, founded by Malaysians, is also looking to provide mobile-only Shariah compliant banking services leveraging on blockchain.