Saudi’s 2030 transformation away from oil dependency (oil makes up about 30-40 of the country’s GDP) program has accelerated thanks to a nationwide adoption of Blockchain, but not quite crypto trading of Bitcoins and related digital currencies.
Regardless, with Islamic finance stamping its approval of Blockchain, the road ahead for this platform has been greased and oiled for a smooth transition away from traditional banking and finance transactions.
Riyadh Municipality partnered with IBM to jointly develop a strategy to streamline government services and transactions on а blockchain, the Coin Telegraph reported.
The aim: Improving the quality of municipal services for customers and integrate leading technologies into services as part of the Saudi Vision 2030 program.
“Riyadh Municipality, IBM, and Saudi tech firm Elm Company will arrange workshops to determine which services can be upgraded using blockchain,” said the crypto site.
IBM will subsequently develop the first blockchain solution at the municipal level, while Elm will implement the technology into services provided by the government.
In May, Saudi Arabia conducted a “blockchain Bootcamp” session focused on building Ethereum smart contracts and decentralized applications (DApps).
The Saudi Arabian Monetary Authority (SAMA) partnered with Ripple in February to provide support for Ripple’s international payments technology to banks in the country. The pilot program will allow participating KSA banks to use Ripple’s enterprise software solution xCurrent for cross-border payments.
Recently, Saudi Telecom and Ateon, a digital solutions provider, ink a fintech blockchain deal.
Under the agreement, Ateon and STC will jointly develop and market blockchain-based FinTech solutions to assist organizations in their digital transformation. Ateon is a founding member of SAMA’s FinTech Saudi Initiative and one of the first companies to blockchain FinTech solutions in the Kingdom.
The memorandum was signed by Riyadh S. Muawad, Vice President of Key Accounts at STC Business.
Muawad said: “Blockchain is one of the key transformational technology which is going to disrupt the status quo and transform all businesses and governments.”
Reuters reported that Saudi approved its first two financial technology licenses to Riyadh-based start-ups Manafa Capital and Scopeer to provide crowdfunding investment services on a trial basis.
Securities regulator Capital Market Authority (CMA) provided the licenses on Tuesday as part of a plan to develop a fintech sector in the kingdom following reforms to reduce its reliance on oil.
Blockchain and Islamic finance
More and more banks in a nearly 2 billion people worldwide Islamic world are adopting blockchain technology and cryptocurrency, according to Forbes.
As early as 2016, major Islamic banks such as ICICI Bank and Emirates NBD began researching blockchain’s capabilities to reduce transactional costs, according to Coindesk.
In 2017, the UAE’s Emirates Islamic became the first Islamic bank to use blockchain technology, namely for fraud prevention.
Using blockchain technology, smart contracts are capable of essentially automating the whole contractual process for Islamic institutions, including enforcing the terms of the contract.
This is the main reason why Saudi ‘s Islamic Development Bank (IDB) started working with crypto firms in Oct. 2017, Forbes reported.
According to SettleMint, one of the crypto startups the bank is working with, the automation that blockchain smart contracts are capable of will reduce administrative and legal complexities.
CommsMEA, an industry site, said Blockchain expert ArabianChain Technology, and ‘innovation firm’ Curiositas will offer blockchain-based smart contracts and legal automation for Islamic finance products.
The ‘Wethaq’ platform is targeting Islamic capital markets, acting as a platform-as-a-service for financial institutions, fundraisers and investors to use in the pre-sale, issuance, management and secondary trading of Sukuk products.
Clients will be able to use Wethaq’s comprehensive and standardized platform for the entire lifecycle of their Sukuk product. The platform’s target customers include financial institutions, investment banks, lawyers, auditors, rating agencies, accredited investors, and fund-raisers.