Duck Creek’s Bitcoin hybrid Wakalah redefines Shariah treasury play

The traditional Shariah compliant treasury has long been a binary choice between zero-yield cash or illiquid real estate; but a new hybrid model is emerging to provide a middle ground.

Duck Creek Hundred Holdings is introducing a “Digital Asset Wakalah” that pairs the growth potential of Bitcoin with the steady income of Islamic REITs and gold.

The structure allocates 80% of capital to Bitcoin for long-term overcollateralization, while the remaining 20% is deployed into yielding Islamic deposits, physical gold ETFs and Shariah compliant REITs, Managing Member Thom Polson shared with IFN Investor.

This tactical split allows the manager to fund quarterly dividends from liquid, non-correlated assets rather than being forced to liquidate underlying Bitcoin during market downturns.

The strategy arrives as Bitcoin’s price volatility – swinging as much as 40% in a single month over the past year – has reignited debates on its Shariah worthiness. Some scholars continue to question how such a volatile asset can align with Muslim values concerned with excessive uncertainty.

However, Thom pushes back on the notion that Bitcoin is merely speculative. He defines it as a "currency in principle" comparable to gold, asserting that if a community accepts it as a medium of exchange, it fulfills the fundamental Shariah requirements for money.

"The idea is you’re not looking to sell the Bitcoin unless you have to, because the majority of the dividends are going to be coming off of your liquid assets – gold, REITs or Islamic deposits. That buffer is there to cover the yield."

By separating the growth engine from the yield source, Duck Creek aims to provide a consistent "certainty" for noteholders. The “buffer strategy” addresses the primary concern of Islamic investors: the need for consistent returns without breaching the spirit of public interest or exposing principal to unnecessary forced sales.

In the niche intersection of Shariah digital investments and yield-generating notes, Duck Creek faces competition from Halogen Capital’s Bitcoin-backed unit trust model, Binance’s crypto Wakalah structure and Wahed’s robo-advisor based ETFs.

Duck Creek’s difference is its fixed-tenure, yield-targeted private placement note model that uses a liquid asset buffer to prioritize investor distribution over market volatility.

If the strategy succeeds, it could be a template for more Islamic fintechs seeking to modernize their balance sheets.