The Blockchain introduced new concepts related to the field of finance especially by giving birth to cryptocurrencies. This technical tool is for some a revolution in the business world, while other conservatives are careful about this new technology. Among its various applications, ICO represent an attractive solution for companies seeking capital. The Islamic orientation of ICO can be an alternative for Islamic financing of projects and businesses to the general public, i.e. companies or individuals. Our analytical and comparative approach is to prove that: - The issue via an ICO results in the appearance of a Token representing the co-ownership of the underlying assets. - The legal structuring of the ICOs is exposed in the light of the Islamic law. - The ICO can constitute a tool having as legal foundation in Islamic law the contracts constituting a montage of Sukuk. This allows the issuance of all sukuk forms and therefore these smart sukuk can meet the common requirements in sukuk issuance. - The governance of token-sukuk issuance provides a guarantee to avoid systemic risks of ICOs. Thus, the Islamic ethics of the issuer and the supervision of the Sharia Board ensure control of the use of the assets harvested for use exclusively in the project object of financing in the "Prospectus / White Paper" of token-sukuk. So, Islamic ICO is more secure for investors than conventional ICO. - The White Paper should provide sufficient information and conditions to validate sharia contracts. - Compliance with Sharia norms to issue smart sukuk prevents issuers from achieving some practices that are considered as haram in sharia, such as selling sukuk-tokens before their issuance or sold them at reduced prices according to blockchain users behaviors in pre-sale phases. In addition to the bonding of the assets to the Sukuk and the periodic declaration of the value of the project, this makes the prices of smart sukuk more stable than traditional tokens with volatile value. - The official regulation of Islamic ICO can provide a posteriori control of companies issuing ICO. Keywords: ICO, Cryptocurrencies, Blockchain, Sukuk, Smart-Sukuk, Token-Sukuk, Islamic governance, Islamic Legal Framework.
Al-Hajjar, Dr. Mohiuddin Adnan
"An Outlook for Employing the "Initial Coin Offering" (ICO) for the Issuance of "Islamic Smart Sukuk" Across the Blockchain,"
UAEU Law Journal: Vol. 2020:
82, Article 5.
Available at: https://scholarworks.uaeu.ac.ae/sharia_and_law/vol2020/iss82/5