Indonesian Islamic microfinance cooperative BMT Bina Ummah has raised 710 million rupiah ($50,000) through the world’s first primary sukuk issuance on a public blockchain and also the world’s first micro sukuk.

Specialised news outlet The Asset reports that BMT Bina used the SmartSukuk platform of Blossom Finance. BMT Bina is an Islamic microfinance institution based in Yogyakarta that supports micro-SMEs and entrepreneurs who are typically excluded from conventional financing support.

“The additional funds provided by this sukuk offers longer term stable funding and increases the overall amount of financing that we can offer our members,” said BMT Bina general manager Arif Yuliyanto.

Islamic financial firms are incorporating social elements, such as environmentally-friendly and sustainable practices, to widen their appeal beyond religiously-minded customers in the Gulf and Southeast Asia.

Plans are to design Islamic bonds, or sukuk, linked to socially-conscious finance that could help mobilise large pools of assets across the Muslim world and increase the impact of Islamic finance.1 I3PvdUSaBNnw4qg_JQqirg

Unlike traditional bonds that are debt instruments with an interest component, sukuks are tradeable instruments based on a profit sharing model, much like stocks.

Blossom Finance CEO Matthew Martin said the SmartSukuk platform removes the conventional barriers to social impact investing by making micro investments feasible, transparent and ultimately tradeable.

“Containerized freight reduced logistics costs which, in turn, brought global commerce within reach of virtually anyone across the globe. In much the same way, tokenized assets reduce intermediary costs, which makes global finance more accessible regardless of size or borders,” he said.

Blossom Finance first introduced its Smart Sukuk platform in May last year to standardise and automate legal, accounting and payment aspects of the bonds. The platform utilizes ethereum smart contracts to “increase the efficiency and reach of sukuk issuance globally,” the firm said at the time.

Blockchain and smart contracts are seeing increasing attention in the bonds markets. A World Bank trial in August raised $81m through its first blockchain-based bond.

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