The Hong Kong Monetary Authority (HKMA), an agency which plays the role of central bank in the region, launched a blockchain-based trade finance platform named eTrade Connect in an effort to boost efficiency in the multi-trillion-dollar funding of international trade.
This initiative, promoted by HKMA, has been launched for trial operation on September 27th and officially went live on October 31st. During the period, 12 banks and 18 enterprises have enrolled in the platform, including HSBC, Standard Chartered, ANZ, Bank of China Hong Kong, Bank of East Asia, DBS, HSB, Agricultural Bank of China, Bank of Communications, ICBC, Shanghai Commercial Bank and BNP Paribas.
HSBC said on Wednesday that the platform, eTrade Connect, had allowed the Asia-focused British lender to reduce the time it takes to approve trade loan applications to four hours, compared with the usual one-and-a-half days.
Trade finance transactions were worth over US$9 trillion in 2017, but the industry is heavily paper-based, and follows processes and procedures that have changed little in decades, or even centuries.
The use of blockchain technology in the banking industry is expected to reduce the risk of fraud in letters of credit (LoC) and other transactions used in trade finance, as well as cut down on the number of steps used.
Prior to it, HKMA has already collaborated with its Singapore counterpart to run a blockchain-powered project to maximize trade and financing between the two global financial centers; by November 2017, around 20 banks from both countries had enrolled in the project. This June, Alibaba subsidiary Ant Financial tested its first blockchain remittances, sending a funds transfer from Hong Kong to Philippine via AliPayHK. Days ago, Hong Kong exchanges are reportedly developing a new blockchain-powered settlement platform designed to help international investors trade mainland Chinese shares.
Hong Kong, one of the world’s freest economies, seems to aim to be the international blockchain hub considering its effort in blockchain application to facilitate businesses of all stripes.
The region has also been active and amicable in the crypto space, with a differing attitude towards cryptocurrency compared to the mainland China, which is infamous for its rigid stance after the ICO ban in September 2017. As a result, many crypto-related businesses in the mainland China chose to move to the more crypto-friendly autonomous territory after escalated crackdown. For instance, crypto exchange OKEx moved its headquarter to Hong Kong from Beijing; Binance opened offices there as well although it opted for having a multinational presence without a headquarter in the end.
With the release of new regulations on crypto funds issued by Hong Kong’s Securities watchdog, the formal regulatory environment there may attract more resources, both funds and talents related to crypto, from the Asia-pacific region where bitcoin is unwelcomed. Hong Kong does have the potential to be the crypto hub.
*Edited based on an article from 8btc.