GIFT Report 2025/26 Analyst Brief

Islamic finance is getting its digital‑assets moment, and to the disappointment of crypto’s loudest evangelists, it looks less like a meme‑coin rally and more like a systems upgrade.

Across the Gulf and South-east Asia, the industry is converging on a pragmatic division of use cases: stablecoins and central bank digital currencies for settlement, tokenisation for distributing real assets, and Shariah governance as an operating system rather than a marketing badge.

The market signals are already visible. CoinMarketCap put total stablecoin market cap at about $317 billion early Jan 26. This is large enough to draw attention as a meaningful settlement rail in a world obsessed with speed, cost and cross-border friction. Tokenised real‑world assets are far smaller: CoinMarketCap shows roughly $4.31 bn of “distributed” tokenised assets (excluding stablecoins) on the same time period. Where institutions are showing up is in on‑chain cash and cash‑equivalents, notably tokenised treasury and money‑market funds. Stablecoin story is still largely wholesale: A JPMorgan analysed estimated only about 6% of stablecoin demand (around $15bn at the time) was payments‑related.

This is where Islamic finance may have an advantage that many conventional players underestimate. Tokenisation finds its footing fastest where there is already an obsession with identifiable assets, documented ownership and explainable cashflows. These are not incidental features of Shariah compliant finance; they are the foundation. In practical terms, tokenisation is likely to scale first in instruments that already look like “the real economy”: quasi-equity sukuk, trade-linked assets, and in the Gulf, property.

Meanwhile, regulators are pushing the conversation from conference panels into rulebooks. In Abu Dhabi, the launch of the FIDA cluster (Fintech, Insurance, Digital and Alternative Assets) is an explicit attempt to build institutional‑grade digital‑asset infrastructure under regulation. In the UAE, the central bank’s Digital Dirham reporting describes a CBDC, wholesale and retail, as part of a wider Financial Infrastructure Transformation Programme to modernise payments and future‑proof central‑bank money for the digital era. In Malaysia, Bank Negara Malaysia has published a discussion paper on asset tokenisation and invited feedback, signalling the debate has shifted from novelty to supervision.

The industry is starting to meet that regulatory mood with pilots that look more like banking than crypto. Fasset received a provisional licence in Malaysia to launch what it calls a stablecoin‑powered Islamic digital bank under sandbox parameters. Read generously, this is not “crypto services” bolted onto Islamic finance; it is an attempt to treat digital currency as supervised infrastructure (payments, settlement and treasury), with tokenisation as a distribution and programmability layer, all under Shariah oversight.

Real‑economy tokenisation is also becoming more tangible in the Gulf. Saudi Arabia has announced national infrastructure to support regulated real‑estate tokenisation and digital transfer of ownership. In a region where property is culturally and economically central, the narrative is easy to explain: fractional exposure to property‑linked cashflows, without pretending that bricks and mortar are suddenly frictionless.

Is it material? Even low penetration can add up. Fitch estimated global outstanding sukuk over $1tn at Q3‑2025. If tokenised wrappers captured even 1-5% of issuance and ongoing servicing over time, that implies roughly $9bn-$45bn migrating on‑chain, before counting Islamic funds, trade‑finance assets or property structures.

Three questions will decide whether this becomes durable. First, can Shariah oversight be operationalised into repeatable controls (including reserve management and ongoing reporting), rather than one‑off approvals? Second, can tokenised claims be made enforceable through robust legal wrappers around title, custody and redemption, especially cross‑border? Third, can distribution economics work, marrying compliance-grade infrastructure with consumer-grade user experience for diaspora and mass-affluent investors?