There has been a marked increase in sustainability-linked Islamic finance in 2025, mobilizing real capital and channeling funds into climate change mitigation and major sustainable development projects. 

Unlike green financing that is exclusively used to finance or refinance new and/or existing green projects, sustainability-linked Islamic financing is designed to incentivize the borrower's achievement of ESG (environmental, social, or governance) targets through pricing incentives.

A borrower’s performance is measured using sustainability performance goals, benefitting on achieving targets or facing financial repercussions otherwise. This adds an additional layer of accountability that values impact than intent.

Here’s a list of ten sustainability-linked Islamic financing transactions in 2025, ranked on the following four factors:

1. Transaction size 
2. The application of proceeds for climate change mitigation and/or adaptation, social infrastructure or sustainable development
3. Adherence to the principles of the International Capital Market Association, listed exchanges or third-party verification
4. Transactions that were issued, listed, or substantially enhanced in 2025 

2025: Ten sustainability-linked Islamic financing transactions

1. Indonesia Sovereign Green Sukuk Wakala ($1.1 billion)
The green sukuk, issued by Indonesian government, is being used to fund sustainable infrastructure projects and climate initiatives. It is set to be listed concurrently on the Singapore Exchange and Nasdaq Dubai.

Islamic Fintech has expanded rapidly over the past decade, with early growth driven by payments, remittances, and digital access to financial services. As the sector matures, attention is shifting from distribution-led expansion toward balance sheet integrity, asset backing, and governance.

This reflects wider global developments, where reserve transparency, verification, and consumer protection are receiving increased scrutiny. Within this environment, digital gold is emerging as a practical retail-facing expression of asset-backed financial design aligned with established Shariah principles. 

Asset backing has long defined Islamic finance, grounded in tangibility, ownership clarity, and disciplined risk-taking. In practice, however, many early Islamic Fintech models mirrored conventional digital finance, where asset exposure was indirect or implicit. Recent developments across digital assets, tokenization, and reserve-backed instruments have renewed emphasis on explicit asset anchoring and verification. These shifts place Islamic finance in closer alignment with evolving regulatory and market expectations.

Gold occupies a distinct position within Islamic jurisprudence as a ribawi asset governed by clear rules on exchange, ownership, and delivery. Unlike many real-world assets now being explored for digital representation, gold benefits from a mature global market infrastructure. Refining standards, custody practices, pricing benchmarks, and audit conventions are widely established, reducing structural ambiguity. These characteristics make gold comparatively easier to translate into digital ownership models without altering its underlying financial or Shariah attributes.

Digital gold models apply modern financial infrastructure to physical gold through fractional access, digital records, and institutional custody. While technology improves accessibility and operational efficiency, it does not alter the requirement for legally enforceable ownership of the underlying asset.

In Islamic finance, this distinction is central. Structures that confer ownership of physical gold differ materially from arrangements that provide contractual exposure to gold prices. The credibility of digital gold therefore rests on ownership mechanics rather than interface or distribution.

Governance frameworks determine the integrity of digital gold structures. Core considerations include asset segregation, custodian independence, audit scope and frequency, and transparency of redemption processes. Digital ledgers and automation can support traceability, but they do not replace legal title or physical verification. From both regulatory and Shariah perspectives, emphasis is increasingly placed on continuous assurance and clear disclosure rather than one-time validation.

Digital gold is often discussed alongside gold-backed stablecoins and other tokenized commodities. While these instruments share asset-linked characteristics, their objectives and risk profiles differ. Stablecoins typically prioritize transactional liquidity, while digital gold savings emphasize ownership and capital preservation. Tokenized commodities introduce further considerations around transferability and enforceability, reinforcing the need for precise classification across asset-backed digital finance.

Despite its structural alignment with Shariah principles, digital gold faces ongoing challenges. Governance standards vary across jurisdictions, consumer understanding of asset-backed claims remains uneven, and regulatory treatment of pooled custody arrangements continues to evolve.

As Islamic fintech enters its next phase, the role of digital gold will be shaped less by technological capability and more by the robustness of ownership, governance, and verification frameworks. Whether the ecosystem can converge on common benchmarks for asset-backed retail finance remains an open question with material implications for the sector.

Today, fintech and decentralized finance (DeFi) applications are revolutionizing the financial world, pushing it into uncharted territory. While Fintech often integrates with traditional financial institutions, decentralized finance focuses on blockchain and distributed ledger technology (DLT) based solutions. Both areas are being carefully examined through the lens of Islamic finance, as experts explore the potential opportunities they may offer.

Starting with Bitcoin, the debate over the compatibility of cryptocurrencies with Islamic finance continues to evolve, sparking diverse interpretations. Scholars and economists often hold contrasting views, leaving Muslim investors in a gray area between halal (permissible) and haram (forbidden) investments. However, it seems inevitable that digital assets will become a central part of financial management in the future. Therefore, this issue should not be reduced to a simple halal-haram dichotomy but should instead be examined from multiple angles to highlight its permissibility or prohibition.

Conceptualized as “Decentralized Islamic Finance”, there are both Islamic finance applications and traditional practices deemed permissible in this space. To address this complexity, the following categorization can be applied:

1. Decentralized finance applications based on Islamic finance principles
2. Islamic finance-compliant decentralized finance applications
3. Islamic finance-compliant decentralized finance applications integrated with traditional finance
4. Decentralized finance applications integrated with traditional finance
5. Traditional finance applications compliant with Islamic finance principles

According to this framework, the first three categories — Islamic finance-based (1), Islamic finance-compliant (2), and Islamic finance-compliant decentralized finance integrated with traditional finance (3) — fall under the umbrella of Decentralized Islamic Finance. All applications emerging within this scope can be evaluated under this framework.

Since decentralized finance began gaining traction in 2016, Islamic finance-compliant digital assets, exchanges, and technology solutions have started to emerge. However, due to the nascent nature of the field, unclear business models, and sustainability challenges, many initiatives have struggled to survive. Early examples include FICE adab solutions, Qintar token, hada dbank, Bayan token, ateon, biocoin, noorcoin, IslamiChain, and ZakatTech. While these projects generated excitement, most failed to sustain themselves. A few, like OneGram, continue to operate passively. This is a common trend in the broader blockchain economy, where many projects fade quickly.

Today, several decentralized finance applications offering Islamic finance services are active and fall under the first category of my framework. Examples include Marhaba DeFi, Islamic Coin, Qitmeer, Takadao, and Cryptozakat. Additionally, there are initiatives that, while not fully decentralized, provide blockchain-based solutions or prepare for new innovations. Tokenization of real-world assets also fits into this ecosystem.

Layer 1 blockchain platforms like Bitcoin, Ethereum, and Solana, along with their digital assets, are also considered compliant with Islamic finance. Notably, this assessment comes from the Shariyah Review Bureau (SRB), a body of Islamic scholars. They have stated that these digital assets do not inherently conflict with Islamic finance principles.

Thirdly, there are Islamic finance-compliant service providers, such as exchanges facilitating digital asset trading. Platforms like Fasset, Rain, and Coinmena fall into this category, enabling broader access to digital assets.

To evaluate decentralized finance applications, an assessment canvas with three main pillars can be used: 

• Purpose and Design, Technical Infrastructure, and Governance. Each pillar includes specific building blocks:
• Technical: Infrastructure, digital asset, smart contract structure, and interoperability with other chains and applications.
• Governance: Execution, Shariah advisory board, official establishment and representation, and oversight.

This canvas provides a structured framework for assessing the compliance and viability of decentralized finance applications within the Islamic finance context.

Decentralized finance is poised to play an increasingly significant role in our financial lives. Given the alignment of blockchain’s transparency, reliability, and distributed nature with Islamic finance principles, it is crucial to address this topic systematically. Ignoring this space could deprive Muslim communities of a transformative technology and its benefits.

The rise of asset-backed digital assets and global investment opportunities presents a unique chance to enhance the sustainability and reach of Islamic finance. Neglecting this potential could result in significant missed opportunities.

As the potential of Decentralized Islamic Finance becomes clearer, I believe all stakeholders will grow more enthusiastic about its possibilities. Until then, we will continue refining the ecosystem map and advancing this transformative field.

The Global Islamic Fintech Report 2025/26 identified 30 notable Islamic fintech companies for 2026, recognized for their pioneering efforts across the $198 billion global fintech industry. 

The companies were selected based on several criteria, including funds raised, innovation in solutions development, market expansion, product diversification, and demonstrated growth (e.g., diversified product offerings and user growth). 

Abdul Haseeb, co-founder and principal at Elipses: “The Notable 30 Islamic Fintech companies are recognised for their contribution to advancing the sector over the past year. They are also an indicator of which geographies and sectors are trending. We expect these companies to be the leaders in a growing sector, continuing to drive innovation.”

Several key highlights and trends have emerged from the 30 Islamic fintech analysis. These are as follows: 

UAE is at the forefront of Islamic fintech growth

Ten out of the 30 notable Islamic fintech companies are based in the UAE, highlighting the country’s strong commitment to building leadership in Islamic fintech. 

Notable funding rounds include Mal ($230 million), and Alaan ($48 million). Advanced regulatory frameworks around open finance, crypto, and real-world assets (RWA) are further strengthening the ecosystem.

The UAE also benefits from a strong talent pool, supported by deep funding pockets and robust regulation from state institutions such as the UAE Central Bank, DFSA, and ADGM. In the Global Islamic Fintech Index, the UAE ecosystem rose by one position to rank 3, overtaking Indonesia.

”What we are seeing in the UAE is an ecosystem shifting from ‘fintech hub’ to ‘institution-grade infrastructure’, where progressive rulebooks, capital depth, and execution capacity combine to make innovation scalable," said Najmul Haque Kawsar, senior consultant and project manager at DinarStandard.

"As the industry converges on stablecoins and CBDCs for settlement, tokenisation for real assets, and Shariah governance as an operating system rather than a badge, the UAE’s moves, such as tokenisation sandboxes, its CARF commitment, and the Central Bank’s Digital Dirham programme, signal a clear intent to lead the next chapter of Shariah-aligned digital finance.”

Fintech is accelerating Pakistan’s financial inclusion

Pakistan has emerged as a growing Islamic fintech ecosystem, with three out of the 30 notable companies originating from the country. 

The GIFT Country Index also shows Pakistan rising by two positions to rank 8.

Although financial infrastructure is still developing, the ecosystem shows strong potential in driving financial inclusion for SMEs and underserved markets. Abhi has served more than 750,000 employees through earned wage access and, in 2025, secured $25 million in Series B funding and expanded into Saudi Arabia. Haball has served over 8,000 SMEs, processing more than $5 billion in payments and $110 million in financing, and last year secured a $52 million funding round.

Digital assets are galvanizing institutional investment momentum

Major developments signal rising integration of  digital assets into the Islamic finance landscape. Examples include Rain’s $250 million Series C at a $1.95 billion valuation, CoinMENA’s acquisition valued at up to $240 million, Fasset’s stablecoin initiatives, and Ruya Bank launching Shariah-compliant Bitcoin trading.

Robust regulation - particularly in the UAE and Bahrain - is attracting innovation and accelerating the development of Shariah-compliant digital asset ecosystems.

Values-based investing is at a tipping point

With growing customer expectations around values-aligned investing, several Islamic investment startups are moving beyond basic Shariah compliance. Notable highlight is Wahed, which pioneered Shariah-compliant UCITS ETFs with additional value-based screening, including considerations around human rights and social justice, signaling a broader shift toward ethical investing within Islamic finance.

Much of the public conversation around Islamic finance and digital assets, cryptocurrencies and blockchain has historically been framed around a single, narrow question: “Is crypto halal?”. While understandable, this framing is incomplete. It treats digital assets as a monolithic product rather than as what they truly are: a neutral financial infrastructure.

A more meaningful and intellectually honest question is not whether digital assets are permissible by default, but whether they can be designed and governed to fulfil the Maqāṣid al-Sharīʿah, the higher objectives of Islamic law.

Islamic finance is not about legal form alone. Its foundation lies in outcomes: justice, transparency, protection of wealth, and the prevention of harm. When viewed through this lens, well-designed digital asset systems are not only compatible with Islamic finance, but in some cases better aligned with its objectives than the conventional interest-based financial system.

The Maqāṣid Framework
The Maqāṣid al-Sharīʿah articulate five core protections: faith (dīn), life (nafs), intellect (ʿaql), lineage (nasl), and wealth (māl). In finance, these translate into ethical constraints (no ribā, gharar, or maysir), protection against exploitation, informed consent, intergenerational stability, and secure property rights. Justice (ʿadl), the removal of harm (rafʿ al-ḍarar), and ease (taysīr) act as cross-cutting principles.

When assessed against these objectives, the shortcomings of the modern financial system become apparent. Opaque balance sheets, excessive leverage, interest-based debt cycles, financial exclusion, and concentration of wealth directly undermine the spirit of Islamic finance, even if transactions are compliant in form.

Digital Assets as Ethical Infrastructure
Blockchain and digital assets introduce several characteristics that are particularly relevant to the Maqāṣid.

Transparency and truthfulness are foundational. On-chain systems allow real-time visibility into asset backing, issuance, ownership, and transaction history. This directly supports the protection of intellect (ḥifẓ al-ʿaql) by reducing deception and information asymmetry, while enabling Sharīʿah boards to audit compliance continuously rather than retrospectively.

Protection of wealth (ḥifẓ al-māl) is enhanced through clear property rights and reduced counterparty risk. Self-custody, immutable records, and programmable settlement lower the likelihood of unjust loss, fraud, or arbitrary confiscation. When digital tokens are fully asset-backed, such as tokenized real estate, commodities, or sukuk, they align closely with Islamic principles of tangible value and risk-sharing.

Justice and fairness (ʿadl) are supported through programmable finance. Smart contracts enable profit-and-loss sharing, predefined fee structures, and automatic enforcement of contractual terms without discretionary abuse. This is especially relevant for Mushārakah and Muḍārabah-based structures, which have historically struggled to scale due to operational complexity and trust deficits.

Removal of harm (rafʿ al-ḍarar) is another key area. Excessive leverage, hidden derivatives, and maturity mismatches are major sources of systemic harm in traditional finance. On-chain systems allow leverage to be constrained at the protocol level and risks to be monitored in real time, reducing moral hazard and financial contagion.

Over the last decade, Fintech has moved into the mainstream of financial services and consumer behavior. The Fintech market revenue is projected to grow fivefold to $1.5 trillion by 2030, with growth driven in part by digital access expanding faster than traditional offerings.

Islamic Fintech is emerging along with this broader momentum, to address the increasing demand for Shariah compliant and ethical products. The global Islamic Fintech market 198 billion in 2024/25 and is projected to reach USD 341 billion by 2029, growing at 11.5% per year. Yet it still represents a small share of global Fintech activity. That gap highlights where the next phase of Islamic Fintech growth is likely to come from.

In any conversation related to technology, it’s difficult to escape the ‘AI’ hyperbole and the lofty expectations set by marketers. But practically speaking, AI does provide a golden opportunity to build and iterate quickly and address structural issues. Operational scaling has long been a challenge in Islamic finance. Due to bespoke products, manual Shariah reviews, lack of data and high compliance costs.  AI, if used responsibly, can address many of these issues, from supporting alternative credit scoring for underserved SMEs, automating Shariah monitoring, and improving risk management. The value is simple, AI can offer lower cost, faster decisions, and wider access, while preserving ethical considerations.

While Bitcoin and cryptocurrencies have had a characteristically frenetic 2025, the enterprise use of the underlying blockchain technology and real-world asset tokenisation continues to mature. Global financial giants such as Blackrock and JP Morgan are investing heavily, spurred on by regulatory tailwinds from the U.S. Islamic finance relies on clear ownership, asset-backing, and trust. Blockchain fits naturally here. Sukuk, commodities or receivables can be issued and managed more efficiently through distributed ledgers. This reduces cost, improves settlement, and democratises access for smaller investors. Progress has continued through 2025, Fasset, the Islamic Finance Super App, is utilising blockchain to offer fractional tokenised equities, blockchain-payments, and develop the first ‘stablecoin-based Shariah compliant’ banking model, following the securing of a provisional banking license. In parallel, firms such as Blade Labs are exploring ways blockchain can be used to improve efficiency, transparency, and auditability in Islamic finance contracts.

Many Islamic financial products sit outside daily economic flows. Users must seek them out. That makes distribution expensive and slow.  Embedded finance changes this.  Shariah compliant BNPL or micro-takaful could sit inside e-commerce platforms, mobile apps and digital transaction flows.  According to a report by Dealroom and ABN AMRO Ventures, the global embedded finance market value is expected to reach $7.2 trillion by 2030. There is a clear opportunity to provide accessible Islamic financial services, to address the growing shift to integrated financial services.

Across successive Global Islamic Fintech Reports, access to capital and navigating regulatory requirements is consistently highlighted as the main hurdles by Islamic Fintech founders. One practical option to address both constraints is to focus on Business-to-Business (B2B) or Business-to-Business-to-Consumer (B2B2C) models. BCG expect these markets to grow by over $700 billion in annual revenues by 2030. Banks are increasingly cultivating innovation through investments, acquisitions, and partnerships, in order to stay relevant. Traditional Islamic banks already have capital, the regulatory permissions, and customer distribution in place. Fintechs are nimble, they can build new products and deploy far faster than banks typically can internally. In an increasingly digital and innovation driven environment, where capital and regulatory access is still paramount, strategic partnership delivers meaningful value for incumbents and Fintechs alike. 

Over the last couple of years, the Middle East and North Africa (MENA) region has moved towards the center of the global Fintech market. Today, the region is home to more than 1,000 Fintech companies, with multiple unicorns and growing capital inflows. A young, mobile-first population, strong government backing, and investment in digital infrastructure have helped Fintechs to scale quickly across payments, lending, and digital banking. Qatar continues to push ahead in Fintech and offers a supportive environment ideal for innovation. This momentum is reflected in investment activity: in 2024, Fintech accounted for a significant share of Qatar’s venture funding, with over 500% year-on-year growth. Qatar Financial Centre (QFC) plays a central role in shaping this ecosystem. Through its Fintech friendly framework, QFC offers company incorporation with 100% foreign ownership, fast licensing, and a common-law environment familiar to international founders.

QFC also works closely with Qatar Central Bank, Qatar Fintech Hub, and Qatar Development Bank, giving founders access to coordinated pathways that combine sandboxes, pilots, funding support, grants and partnerships. Qatar offers practical conditions for building new financial products. The digitally engaged population, a leading Islamic finance sector and dedicated Fintech support programs provide a space for innovation, particularly for Islamic Fintech use cases, to test and scale.

Islamic Fintech is poised to enter the next phase of growth. Emerging technologies such as AI, blockchain, and open banking will enable new products and lower barriers to entry. As supportive regulatory frameworks and ecosystem support matures, more players are likely to enter the market. This will intensify competition, but also create opportunities for partnership, collaboration, and selective consolidation. Over time, these trends should lead to stronger products and wider access to Shariah compliant financial services.

Asset tokenization is emerging as a practical way to modernize Islamic capital markets by representing real-world financial claims and ownership rights as programmable digital tokens. Tokenized sukuk is a particularly relevant use case, where issuance, reporting, and secondary-market activity can become more transparent, automated, and auditable. However, scaling from pilots to resilient digital markets requires more than token standards; it requires enabling components that support macro-linked payout logic, trusted macroeconomic data inputs, and stable, well-governed market functioning. Two capabilities are especially important in this context:

• GDP-linked (or GDP-sensitive) sukuk, where distributions adjust according to transparent economic indicators, improving alignment with real economic capacity. In practice, GDP-linked features typically rely on official published GDP data with defined lags, smoothing rules, and fallback provisions to handle revisions and reporting delays.
• Advanced inflation tracking, where higher-integrity data collection and reporting improve confidence in real-return assessment and index-aware cashflow management.

Complementary data and governance tools can support macro-linked instruments in tokenized markets. Truflation provides higher-frequency (e.g., daily-updated) CPI/inflation indicators with a documented methodology; Chainalysis’ Crypto Adoption Index is a proxy for digital-asset adoption/usage; Consensys surveys capture adoption perceptions; and Snapshot supports governance (e.g., voting on data sources and parameters) rather than producing macro indicators. To complement these technologies, the Islamic Development Bank Institute (IsDBI) has introduced a suite of complementary innovative solutions that can serve as enabling components for these capabilities: the Smart Credit Management System (SCMS) (patented), Smart Voucher (patented), and the Smart Stabilization System (SSS) (patent pending). Together, they form an infrastructure stack that strengthens discipline, programmability, data-driven execution, and market stability - key ingredients for GDP-linked sukuk and enhanced inflation-tracking tools. GDP-linked and inflation-aware structures are not only “token design” questions; they are systems challenges involving data governance, execution integrity, market stability, and inclusive distribution. IsDBI’s innovative solutions help address these constraints in an integrated manner.

SCMS (Patented): A Market Integrity and Discipline Layer
The Smart Credit Management System provides on-chain recording of payment behavior, transparent credit indicators, and structured support mechanisms for verified distress. For GDP-linked sukuk platforms, SCMS:

• Reinforces confidence in macro-adjusted cashflows through auditable behavioral records,
• Reduces execution uncertainty by standardizing triggers and evidence, and
• Supports resilience during economic stress without undermining market trust.

SCMS does not define macro indices; rather, it strengthens accountability, transparency, and orderly execution around macro-linked instruments.

Smart Voucher (Patented): Programmable Distribution and Inclusion
Smart Voucher enables controlled-purpose spending, targeted value distribution, and fully traceable disbursement pathways. Within GDP-linked sukuk and inflation-aware ecosystems, it:

• Supports automated and auditable payout and reporting flows,
• Enables policy-aligned interventions and benefit calibration, and
• Provides a programmable environment where inflation-aware rules can be executed transparently.

Smart Voucher strengthens programmable distribution and operational credibility in macro-linked token markets.

SSS (Patent Pending): A Stability Layer for Tokenized Sukuk Markets
The Smart Stabilization System introduces rules-based market-stabilization controls to help reduce destabilizing volatility in tokenized secondary markets. For GDP-linked and inflation-sensitive instruments, SSS:

• Mitigates short-term market overshooting and speculative swings,
• Improves market confidence and regulatory readiness, and
• Supports orderly trading during macro-data events.

SSS helps ensure that macro-linked token markets behave like credible capital-market environments rather than speculative venues.

In tokenized finance, building an effective inflation-tracking ecosystem goes beyond simple data feeds. It requires secure data ingestion, robust governance frameworks, transparent audit trails, and automated workflows that comply with Shariah and regulatory standards. These elements ensure that inflation-sensitive instruments operate with integrity and predictability. A clearer way to frame the ecosystem is to separate:

• the data/reference layer (how inflation indicators are constructed, validated, governed, revised, and audited), and
• the execution and market layer (how those indicators are used in smart contracts, reporting, distributions, and trading venues).

Blockchain-based tools can strengthen the data/reference layer by enabling higher-frequency indicators, multi-source cross-checking, and transparent, auditable governance over how data is selected and updated. For example, Truflation can be referenced as a higher-frequency CPI/inflation signal with a published methodology, while adoption indices (e.g., Chainalysis) and perception surveys (e.g., Consensys) can add contextual market intelligence - without being treated as official macro statistics. Finally, Snapshot-style DAO governance is best used to manage data-source trust, update/approval rules, and fallback mechanisms for disruptions or revisions, rather than to produce macro indicators itself. Within such architectures, IsDBI’s innovative solutions add critical operational strength.

Gulfood 2026 has drawn the curtains after five packed days, reinforcing its status as the world’s largest food and beverage trade show - and a notable barometer for the halal economy’s next phase of growth.

Halal food manufacturers from every region - from major multinational players to fast-scaling innovators - converged on Dubai to unveil new products, announce investments, and establish trade relationships with key players across the Middle East and beyond.