The application of blockchain to trade finance is expected to be one of the key focal areas for the new Shenzhen-based fintech term launched by the Chinese central bank.
The Digital Currency Research Institute of the People’s Bank of China (PBOC) has just invested in the establishment of Shenzhen Fintech Co., Ltd. (深圳金融科技有限公司), which was established on 15 June 2018 with registered capital of 2 million yuan.
The business scope of Shenzhen Fintech is “fintech-related technological development, technological consulting, technological transfer and technological services; fintech-related systems development and operations maintenance.”
The company is already participating in projects including blockchain-based trade finance according to sources speaking to 21st Century Business Herald, with the official launch of a trial run of the “Bay Area Trade Finance Blockchain Platform” (湾区贸易金融区块链平台) on 4 September.
The platform will focus on the establishment of an “open finance trade ecosystem centred on the Greater Bay area of Guangdong, Macau and Hong Kong,” with both domestic and international links.
The platform is a joint initiative of the PBOC Digital Currency Research Institute and the PBOC Shenzhen Central Branch Bank, with the successful completion of first-stage targets in relation to the platform following nearly two months of collaboration with Bank of China, China Construction Bank, China Merchants Bank, Ping An Bank, Standard Chartered and BYD.
The first stage of the project has seen the establishment of a foundation trade finance platform based on blockchain technology, facilitating trade and financing activities including accounts receivable trade financing.
The platform also serves as a trade finance regulatory system, enabling authorities to engage in dynamic, real-time monitoring of various financial activities.
Despite the launch of a crackdown on cryptocurrencies in September 2017, the Chinese central bank is betting heavily on the potential of blockchain technology in the financial sector, emerging as the world’s leading applicant for related patents last year.
PBOC’s Digital Currency Research Institute has already applied for 71 patents according to data from the State Intellectual Property Office, most of them related to virtual currencies.
In addition to the blockchain initiatives of the Digital Currency Research Institute, PBOC’s China Banknote Printing and Minting Corporation has also founded a Hangzhou-based blockchain research institute (中钞信用卡产业发展有限公司杭州区块链技术研究院), which has already launched the Luopu Open Blockchain Registration Platform (络谱区块链登记开放平台) and Block-X solution plan (中钞金融区块链解决方案).