[Narrator]

Hello everyone, welcome back to the TokenMinds Training series.
Today we’ll walk through how tokenized Murabaha can be implemented in practice to resolve issuance friction, execution delays, and scaling limits, while preserving full Shariah compliance.

This session focuses on implementation, not theory.
We’ll cover how on-chain verification enables controlled execution and real-time compliance, and how Murabaha operations can be transformed to scale efficiently without compromising Shariah principles.

Murabaha replaces interest with a cost-plus sale structure.
The bank purchases a real commodity, takes legal ownership, sells it to the client at cost plus profit, and the client resells it for cash with deferred payment.
Each step must happen in sequence, with ownership verified and pricing transparent.
At scale, this creates heavy operational burden and delays.

Issuance friction comes from identity checks, Shariah approvals, legal documentation, and manual setup, often costing over one hundred dollars per transaction.
Execution delays occur because five sequential steps can span several days, increasing market exposure risk.
Scaling is limited because manual processing creates hard volume caps, and adding transactions requires disproportionately more staff.

Abu Dhabi Islamic Bank actively uses distributed ledger technology in trade finance and Murabaha-linked transactions.
This allows documentation to be digitized, execution steps to be enforced in the correct order, and coordination to improve under Shariah governance.
The focus is operational control, not experimentation.

Abu Dhabi Islamic Bank begins by tokenizing the underlying commodities at the source.
Approved warehouses issue on-chain representations of physical commodities, with each token carrying embedded metadata such as quantity, location, pricing, insurance coverage, and Shariah certification.
These tokens are linked directly to warehouse inventory systems through APIs, so ownership status is always synchronized with the physical asset.
As a result, ownership verification becomes cryptographic and instant, reducing transaction costs dramatically and removing hours of manual checks from every Murabaha transaction.

Once the asset is tokenized, the entire Murabaha lifecycle is executed through a single smart contract.
This contract enforces the correct sequence automatically: bank purchase, ownership confirmation, sale to the client with disclosed markup, and deferred payment setup.
All steps are treated as one indivisible transaction, meaning if any condition fails, the transaction is rolled back entirely.
This removes reconciliation, sharply reduces errors, and compresses execution time from days to minutes while lowering operational risk.

Shariah compliance is enforced directly within the smart contract logic.
Only commodities approved by the Shariah Board can be used, and bank ownership must be proven on-chain before resale can occur.
Markup calculations are transparent, recorded on-chain, and explicitly acknowledged by the client.
Participation is restricted to licensed banks, KYC-approved clients, and approved brokers, with automated sanctions screening blocking prohibited activity.
By approving the code itself, Shariah scholars enable compliance to scale without reviewing each transaction individually.

Tokenized Murabaha works through three mechanisms together.
First, asset-native issuance provides instant ownership verification.
Second, atomic execution ensures the entire lifecycle runs as one indivisible transaction.
Third, embedded Shariah controls enforce compliance in real time before execution begins.

Tokenized Murabaha acts as an execution and settlement layer without replacing existing systems.
It integrates with core banking platforms like Temenos and Oracle FLEXCUBE.
Warehouse systems sync in real time for physical asset matching.
Pricing, credit, and sanctions data are provided by trusted oracles.
Payments run through existing rails such as SWIFT and RTGS, with accounting and audit systems updated automatically.

TokenMinds helps banks design Shariah-compliant Murabaha structures that scale in real production environments.
We translate Murabaha into asset-native, on-chain execution models, encoding approved rules, pricing logic, and ownership flows directly into smart contracts.
This allows banks to scale Murabaha efficiently while maintaining governance, auditability, and Shariah confidence.

Thank you for watching and see you in the next training video.