Malaysian authorities have approved the first stablecoin-powered Islamic digital bank by granting Shariah-compliant financial services firm Fasset a provisional license from the Labuan Financial Services Authority. Fasset, a Dubai and Jakarta-based digital banking and investment platform, said in a recent announcement that it had secured a provisional license from Malaysia’s Labuan Financial Services Authority, which would allow it to operate within a regulated sandbox focused on Shariah-compliant financial services. With this approval, the company said it is now positioned to offer a full suite of digital banking products aligned with Islamic finance principles, including zero-interest banking, deposit-taking, and cross-border payments. Fasset’s CEO, Mohammad Raafi Hossain, called the development a significant milestone in the company’s mission to bridge traditional banking credibility with fintech innovation in a fully halal environment. According to the firm, this license marks the first step in launching a stablecoin-powered Islamic digital bank designed for underserved communities across Asia and Africa. In addition to banking services, Fasset also plans to roll out a crypto debit card and expand access to investments in US equities, digital gold, and crypto assets. What is Islamic finance? At the heart of Fasset’s model is Shariah compliance , a system of financial ethics rooted in Islamic law. Islamic finance prohibits interest (riba), speculation (gharar), and any association with industries considered harmful or haram, such as gambling or alcohol. Financial contracts must be rooted in real economic activity, and all investments must comply with ethical screening and risk-sharing principles. This system has been increasingly embraced by Muslim-majority countries and communities seeking ethical financial alternatives. With the new license, Fasset said it will also begin pilot programs to integrate digital savings and yield-bearing products that do not involve interest, tapping into the growing demand for halal digital finance. Alongside expanding its global footprint, Fasset is also working on launching its own Ethereum layer 2 network, called “Own,” built on Arbitrum, which it says will allow seamless settlement of real-world assets in a compliant manner. A recent report by INPUT projected the Islamic finance sector to grow from $8 billion today to $12.5 billion by 2028. Projects like HAQQ Network, MRHB, Sidra Chain, and Goldsand have made notable inroads into this space, with HAQQ alone serving over 6 million users. Yet, some analysts believe the market remains underserved, especially among Gen Z Muslims, who are already interacting with Islamic banking tools at record rates. Malaysia eyes crypto regulations Fasset was granted a provisional license, as Malaysia has been looking to overhaul its regulatory stance on digital assets. The Malaysian Securities Commission has recently proposed a new framework to allow approved digital asset exchanges to list tokens without prior approval, provided they meet specific eligibility criteria. At the same time, the proposal seeks to tighten compliance standards for exchanges, including stricter segregation of customer assets and enhanced financial safeguards. Malaysia also launched a Digital Asset Innovation Hub earlier this year, where projects can explore use cases such as programmable payments, supply chain finance, and the use of ringgit-backed stablecoins under the supervision of Bank Negara Malaysia (BNM). The post Malaysia approves first stablecoin-powered Islamic digital bank, Fasset appeared first on Invezz
