Malaysia Breaks Ground with World’s First Stablecoin-Powered Islamic Bank

Malaysia is about to do something no other country has done before: launch the world‘s first Islamic digital bank built on stablecoins. The green light came after regulators approved a provisional licence for Fasset, a global digital asset investment platform, allowing it to operate in the country’s Islamic fintech sandbox.

This isn‘t just another banking start-up. It’s a test of whether blockchain technology can coexist with centuries-old principles of Islamic finance. And if it works, it could rewrite the rulebook for how Muslims, and perhaps the wider world, save, invest, and spend.

A Different Kind of Bank

What Fasset is building looks very different from a traditional bank. Islamic finance prohibits riba, that is, the charging or paying of interest, which rules out the model most banks rely on. Instead, Fassets approach is built on stablecoins and tokenised assets.

That means customers will be able to protect the value of their deposits without earning interest. On top of that, theyll get access to U.S. equities, gold, and cryptocurrencies, plus the ability to use a Visa-linked crypto card for everyday purchases. The pitch is simple: security against inflation, seamless access to global markets, and compliance with Islamic law.

The Vision Behind It

Fasset‘s CEO, Mohammad Raafi Hossain, sees the project as more than a financial experiment. He believes it represents a fusion of tradition and innovation through the reliability of a bank combined with the disruptive energy of fintech. His team’s ambition is to bridge the gap between faith-based finance and cutting-edge technology, making blockchain not just a tool for speculation but a foundation for trust.

And theres more. Alongside the banking initiative, Fasset plans to launch “Own,” its Ethereum Layer 2 network built on Arbitrum. The aim is to settle regulated, real-world assets directly on the blockchain. In practice, this could mean more transparent and secure transactions that satisfy both regulators and Shariah scholars.

Why the World Is Watching

Malaysia has long been a hub for Islamic finance, but this latest move puts it firmly in the global spotlight. If the model succeeds, it could open the door for similar banks in other Muslim-majority markets, where demand for Shariah-compliant digital services is growing rapidly.

For the wider financial world, the implications are just as significant. The experiment will test whether stablecoins and tokenised assets can underpin a trusted banking system, not just as speculative instruments, but as everyday financial tools.

A Bold Step Forward

Of course, questions remain. Can a system built on blockchain really deliver the stability and security that banking customers expect? Will regulators in other countries embrace the model, or resist it?

What is certain is that Malaysia has taken a bold step. By marrying digital assets with Islamic finance, it is positioning itself at the frontier of a new kind of banking that could influence markets far beyond its borders.