HSBC Conducts First Yuan-denominated Blockchain-based Letter of Credit Transaction


HSBC says it has just completed the first ever yuan-denominated letter of credit transaction based on blockchain technology.

HSBC announced on Tuesday that the transaction made use of the Voltron trade finance blockchain platform it developed in collaboration with other banking sector peers including BNP Paribas and Standard Chartered.

Letters of credit serve as guarantees from banks that sellers will receive payments from the buy side of transactions.

The blockchain-based letter of credit transaction just completed by HSBC involved the delivery of LCD equipment from Hong Kong to China, and reduced the execution time to just 24 hours, as compared to the 5 – 10 days that paper processing requires.

HSBC sees a huge market for blockchain-facilitated yuan-denominated transactions, given that trade involving China generated 1.2 million letters of credit worth approximately USD$750 billion in 2018.

Ajay Sharma, HSBC’s regional head of global trade and receivables finance for Asia-Pacific, anticipates a commercial launch of the Voltron platform by as soon as the end of 2019 or the start of 2020.