HSBC Bank revealed that it has been successful in carrying out the industry’s first overseas blockchain transaction using a digitized Letter of Credit (LoC), an important instrument in the area of international trade, based on a report by International investment.
The bank disclosed that the parties involved in the trade were Australia’s Fox & Lillie, which sent a 19-tonne container of wood to China’s SDIC International Trade Nanjing Company (SDIC).
The blockchain-enabled platform made it possible for firms involved to review the documents in near real-time, as opposed to sending paper documents back and forth. The move was proven to decrease operational costs, lead time, and potential risks for all parties.
HSBC claims that digitizing LoCs will offer exporters greater advantage when sending shipments overseas, thanks to the transparency of blockchain-based platforms.
Ajay Sharma, HSBC’s Asia Pacific Regional Head of Global Trade and Receivables Finance, said that China is the world’s largest issuer of LoCs by value, at nearly US$750 billion last year. He believes the digitization of LoCs could shift the market in China.
Joseph Arena, HSBC Australia’s head of global trade and receivables finance, revealed that the “live deal” between the two parties was made on a blockchain platform that the bank had implemented over the past year in a number of world markets, demonstrating the commercial and operational viability of the blockchain solution.
The transaction was carried out on a new platform, Voltron, which had been developed by multiple international banks and blockchain firms including Bangkok Bank, BNP Paribas, HSBC, ING, NatWest, Standard Chartered, CryptoBLK, and R3.
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