The sukuk was awarded “Best Green Financing - Microfinance” in the global region category  and “Most Innovative Deal” within the Asia Pacific region by The Asset Magazine.

JAKARTA, Indonesia. August 6, 2020 – Blossom Finance announced a performance of a 15.5% cumulative annualized gross investor return in the nine months since the issuance of the world’s first blockchain sukuk. The sukuk was issued by Indonesian microfinance institution KSPPS BMT Bina Ummah in Indonesia on Blossom’s SmartSukuk™ platform and has been used to expand the issuer’s portfolio of social impact focused financing - so far, funding 234 individual micro-businesses.

The full quarterly report on the sukuk is available here:

The sukuk of Rp715 Million Indonesian Rupiah ($50,476 USD) with a one year tenor based on the mudharabah principal of profit and loss sharing has thus far rewarded investors with a 15.5% annualized gross return since issuance. This represents a cumulative realized profits distribution of Rp 81 Million IDR ($5,515 USD) for the first nine months since issuance.

“The continued high performance of the sukuk during the peak of a global pandemic is notable and attributable to concentration within the real-sector - areas less adversely affected by the economic downturn” explained CEO Matthew J. Martin.Indonesia’s large-scale social restrictions (PSBB) aimed at curbing the spread of the pandemic included specific exemptions for real-sector economic activity such as farming, food distribution, and traditional market sellers. Portfolios of microfinance cooperatives like the sukuk’s Issuer - BMT Bina Ummah - are heavily weighted toward these real-sector businesses.

“The continued robust performance of this investment despite a challenging macro-economic environment compares very favourably with most asset classes at a global level. It is testament to the diversified, portfolio-based approach to the structure where unlike P2P crowdfunding, investors are not solely exposed to the performance risk of a single borrower” commented Blossom’s Chief Investment Officer, Mufid Shawwa.

“Despite its social promise, the global Islamic Finance sector has done little to help those SMEs and entrepreneurs at the lower end of the income pyramid, especially during Covid” notes Khalid Howladar, Chief Strategy & Risk Officer of Blossom Finance. “Through the use of technology, Blossom is able to offer retail investors a much more equitable, transparent, and rewarding way to make a real impact.”

BMT Bina Ummah’s General Manager, Ibu Ely Heni, noted:  “Our mission is to economically empower members of our community and sukuk funding on the Blossom platform is a powerful tool that allows us to expand the reach of our efforts. We also feel the true variable profit rate sukuk concept supports a stronger liquidity and funding profile for our business.”

The sukuk is denominated in Indonesian Rupiah; investor net returns are subject to the prevailing Rupiah-Dollar exchange rate. During the height of the Covid-19 crisis, the Indonesian Rupiah weakened against the Dollar along with many other emerging market currencies: in March 2020, the average monthly IDR:USD rate fell by 10.45% compared to the rate at issuance. Indonesian Rupiah has since rebounded and currently stands at -2.39% compared to the rate at issuance of the sukuk.

Traditional Market Funded by a Non-traditional Sukuk

Amidst the merchants hawking everything from food to farm tools in the bustling markets of Indonesia may be the last place you’d expect to find blockchain being used. But in Pasar Godean - a traditional market in the sub-district in Yogyakarta, Indonesia - hundreds of small businesses have now been financed through the blockchain. Microfinance cooperative BMT Bina Ummah broke ground in October 2019 when it raised funding to expand its microfinance portfolio using Blossom’s SmartSukuk™ platform that runs on the Ethereum blockchain and smart contracts.

Blossom’s platform focuses on investments making a positive social impact. To date, 234 individual micro-entrepreneurs have been financed through BMT Bina Ummah’s sukuk, with the average amount financed per beneficiary of Rp 5.1 Million ($350) USD). The largest individual amount financed in the portfolio was Rp 20 Million ($2,940 USD) and the smallest amount financed was Rp 0.38 Million ($26 USD). Microfinance institutions like Bina Ummah aim to reduce poverty by helping micro-entrepreneurs create or grow businesses that generate livable incomes.

Blossom CSRO Khalid Howladar will participate in a webinar entitled “Islamic Economy 2.0 - Blockchain as an Enabler for Impact Finance” hosted by Islamic Markets on Thursday August 6th. Interested participants can register for the webinar here:

About Blossom’s SmartSukuk™ Platform

Sukuk issued on Blossom’s platform run on the ethereum blockchain, a public blockchain that supports smart contracts. Smart contracts are a type of computer program that runs in a blockchain instead of on a traditional computer. These programs can facilitate safe and secure transfer of value - including certificates representing ownership of assets, like sukuk.

An important consideration for sukuk are the pro-rata rights of investors. Periodic profit distributions must be paid correctly based on the current ownership of the sukuk. Since sukuk is a capital market instrument, the ability to trade in secondary markets and grant custody to third parties are important features.

“We selected ethereum because of its long and proven track record, especially the ERC20 specification” explains Blossom CEO Matthew J. Martin.

‘Tokens’ are digital certificates representing ownership tracked and traded using blockchain. The ERC20 token standard aims to ensure blockchain assets work seamlessly with a variety of systems. Blossom’s platform supports ERC20 and other higher level specifications, so securities issued on the Blossom platform generally work with most existing blockchain wallets and can be easily listed on secondary markets.

“Things like secondary market trading, third party custody, and a range of other features are built-in to ERC20. Plus, the wide availability - and good liquidity plus trade depth - of various fiat stable coins is another huge plus for the blockchain sukuk ecosystem. You just won’t find that with a lot of these ‘roll-your-own’ blockchain ideas.”

Stable coins are blockchain tokens representing ownership of real world fiat currency held in a custodial bank. Multiple stable coins already exist for both reserve currencies like USD and emerging market currencies like IDR.

“We’re working to remove the high barriers to entry for Islamic capital markets, and blockchain is a key enabling tool. Part of the entire promise of blockchain is a more open and accessible global financial system. The use of public blockchains for capital markets is the obvious path towards greater financial inclusion.”

For more information about this and other blockchain-powered sukuk, visit:


About Blossom Finance

Blossom Labs, Inc. is a US Delaware company, operationally headquartered in Jakarta. Founded in 2014, Blossom aims to increase the availability of ethical financial services based on Islamic principles through technology.

Blossom’s SmartSukuk™ platform helps institutions raise cost-effective, Shariah-compliant financing from global investors using blockchain technology. Since 2015, Blossom has been helping microfinance institutions in Indonesia raise funds from international investors to fund micro-businesses aimed at reducing poverty.

About Sukuk

Sukuk is a shariah-compliant capital market instrument, prior to Blossom’s SmartSukuk™ platform primarily accessible only by sovereigns (governments) and large corporations to raise funds. Unlike bonds, which are based on the right to collect a debt and interest payments, sukuk are based on ownership of assets and periodic profit payments generated by those assets.

According to the IIFM Sukuk Market Report (9th Edition), the total global sukuk issuance in 2019 topped $145.70 Billion USD, an increase of +18.3% over 2018. The Muslim-majority countries of Malaysia, Indonesia, UAE, Saudi Arabia, and Turkey collectively make up the majority of all sukuk issuances.

Legal Disclaimer

Investments on Blossom’s platform are neither guaranteed nor insured, and investors may lose some or all of the principal invested. Blossom is not a financial advisor and statements appearing on Blossom's website and communications from Blossom do not constitute financial advice. Historical Returns are not intended as a promise of future results. Investments may have negative returns. Prior to making an investment decision, prospective investors should carefully consider all terms and risk factors stated in the offering documents and information appearing in/on Blossom’s website and apps. Investments are subject to a number of risk factors, including but not limited to issuer credit, currency, political, legal, regulatory, liquidity, settlement, concentration, portfolio performance, and platform risks. US Residents must qualify as accredited investors under Regulation D of the Securities Act of 1933.

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Credit / Citation

Martin, M. J. (2020, August 4). BMT Bina Ummah 2 Variable Profit Rate Sukuk Q3 2020 Report [PDF]. Jakarta: Blossom Finance.