Advancing Digital Trade 2025

Haifin participated in the sandbox to test its blockchain-based solution for digitalizing bank guarantees – a critical but often overlooked component of trade finance. The company aimed to transform the traditionally paper-based guarantee system into a secure digital process that reduces fraud, increases transparency and improves operational efficiency. Haifin collaborated with the Central Bank of the UAE (CBUAE) and leading UAE financial institutions, including First Abu Dhabi Bank and Sharjah Islamic Bank. The platform uses the UAE‘s 2021 Electronic Transactions and Trust Services Law (ETL), which provides legal backing for digital documents. Over a four-month period, the sandbox simulated real-world guarantee transactions where banks issued digital guarantees. Beneficiaries received, verified and managed these guarantees through Haifin’s beneficiary management system, with the full life cycle of guarantees – amendments, claims, extensions and releases – digitally recorded and processed. The platform used private data collections and Merkle root hashing (which is a result of hashing the transactions in a block, pairing those hashes and hashing them again until a single hash remains) to ensure security, transparency and privacy between participants, with each institution maintaining its own blockchain node. Main findings The testing demonstrated that all participants could seamlessly register and manage digital guarantees across the platform. The blockchain infrastructure successfully supported independent, secure nodes for each party, ensuring data privacy while maintaining auditability. The system effectively reduced the risk of fraud, document loss and delays common in paper-based systems. Beneficiaries gained the ability to access and manage guarantees digitally through an end-to-end interface that supported all life-cycle functions. Importantly, the model proved capable of accommodating non- participating beneficiaries via a verification portal with hashed summary data, addressing the challenge of partial ecosystem adoption. Regulatory takeaways The testing confirmed that the UAE’s 2021 Electronic Transactions law provides a valid legal foundation for electronic guarantee issuance. However, the sandbox revealed that clear regulatory messaging and endorsement from the CBUAE would be critical to enable adoption at scale. Participants highlighted the need for guidelines on legacy conversion – transitioning existing paper guarantees to digital formats – and standardized compliance with international frameworks such as URDG 758, which reflects international standard practice in the use of demand guarantees for digital instruments. The fragmented regulatory environment across different economic zones in the UAE emerged as a potential obstacle to comprehensive adoption. To accelerate implementation, the sandbox findings suggest that regulators should consider setting target dates for mandatory digital issuance and providing formal endorsement of platforms that meet security and compliance standards.4.2 Haifin: Digitalizing bank guarantees Haifin BOX 10 Company background: Based in the UAE, Haifin digitalizes bank guarantees using blockchain and Merkle root hash technology. By converting traditionally paper-based guarantees into verifiable digital records, it reduces fraud, increases transparency and improves operational efficiency in trade transactions. Main technology features: –Private, permissioned blockchain for secure guarantee issuance and management –Independent, secure nodes for each participating institution –Digital life-cycle management for guarantees (issuance, amendment, claims, extensions) –Verification portal for non-participating beneficiaries Testing participants: Throughout the sandbox, Haifin worked with the Central Bank of the UAE, First Abu Dhabi Bank, Sharjah Islamic Bank and leading beneficiary organizations to demonstrate the feasibility of transitioning the UAE’s AED 463 billion guarantee market to digital infrastructure. Advancing Digital Trade: Insights from the UAE TradeTech Regulatory Sandbox 21