A new platform that will put private banks in partnership with the Hong Kong Monetary Authority is the clearest sign that the city is giving financial blockchain initiatives the nod.
First launched as a proof-of-concept project in March 2018, “The Platform” will digitize trade documents and automate trade finance processes using blockchain. Run by Ping An and Deloitte, it will see the Monetary Authority partner with private banks including ANZ, Bank of China (Hong Kong), The Bank of East Asia, DBS Bank (Hong Kong), Hang Seng, HSBC and Standard Chartered Bank (Hong Kong).
“We believe this new platform will help spur the digitization of both physical and financial trade supply chains, making the process more safe and efficient for our clients,” said Ivy Au Yeung, CEO Hong Kong, ANZ.
The Platform aims to allow banks and their corporate clients to submit and record purchase orders, invoices and applications for financing using distributed ledgers, which in theory should reduce the risk of fraudulent trade and identity theft while at the same time increasing credit access and lowering financing costs.
Howard Lee, Deputy Chief Executive of the Hong Kong Monetary Authority, says the next step is “to link up with other trade platforms in other jurisdictions to further facilitate cross-border trades.” At present the Platform is undergoing user acceptance tests with the aim of starting in September 2018 with open account financing capabilities.
“The announcement is further proof that blockchain has the potential to digitize trade by eliminating inefficient processes and reducing the amount of unstructured paper,” says Vivek Ramachandran, Global Head of Growth and Innovation, Commercial Banking for HSBC.
Despite all the positive talk, Hong Kong authorities have had a difficult relationship with blockchain initiatives. In February 2018, the Securities and Futures Commission alerted investors to the risks of using crypto-currency exchanges and investing in ICOs and followed it up with regulatory action, halting Black Cell Technology Limited’s ICO in March.
Whether this move will translate into a friendlier regulatory and trading environment for the crypto-currency industry remains to be seen.
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