China: Bank of Communication issues securities via Blockchain

One of China’s largest banks, the Bank of Communication (BoCom), issued $ 1.3 billion worth of real estate securities at the end of September through a blockchain network. The major bank once again underscored the practical benefits of blockchain technology. It’s the first time in history that Distributed Ledger technology is being used to issue such securities.

Residential Mortgage Backed Securities (RMBS) are mortgage-backed securities that are often sourced from major banks because of their long-term return prospects. But this is happening through the blockchain is a novelty. The Bank of Communication used the self-developed Jucai chain blockchain. It pursues the purpose “to allow more transparency and security in securities contracts”. The bank first introduced the Blockchain in June 2018 and started to feed the data a month later.

In August, the bank commented on the launch of Blockchain as follows:

“The participating parties have the opportunity to keep track of all relevant information in real time at any time. In this way you can convince yourself of the authenticity of the underlying assets. “

Blockchain for securities – a win-win situation

In fact, the offer seems to bring many benefits: all parties can complete blockchain operations entirely individually and in real time. They also have at all times insight into current developments and are not dependent on third parties. Auditors and tax consultants are also getting easier access to the data – but whether this represents progress from the perspective of privacy advocates, one may doubt.

Blockchain in the banking world: A clear trend

The Bank of Communication is thus continuing the trend to implement more and more blockchain applications in the banking sector. For example, in August the World Bank commissioned the Commonwealth Bank of Australia to create a blockchain-based bond. Not only private banks are opening up cryptocurrencies  – even central banks such as the Bank of Thailand are taking this trend by starting to develop their own crypto currencies . In this respect, a partly paradoxical situation arises: Bitcoin and the Blockchain have set out to create an alternative to the banks. These are just some of the big sponsors of Blockchain.

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