HSBC processed the first-ever Yuan-denominated blockchain-based letter-of-credit transaction for MTC Electronics over the Voltron blockchain platform.

In a major milestone, banking giant HSBC completed the first-ever Yuan-denominated blockchain-based letter-of-credit transaction on Tuesday, September 3. Since long, HSBC has been working on introducing the use of blockchain technology to the traditional paper-based method of financing trade.

HSBC performed this transaction in the Yuan currency over the blockchain-based Voltron trade finance platform. Voltron is a blockchain platform developed by eight global banking giants including HSBC, Standard Chartered, and BNP Paribas.

Moreover, the trade involved the shipment of LCD panels and parts by MTC Electronics from Hong Kong to Shenzhen. Speaking on the successful execution of this trade, Ajay Sharma, HSBC’s regional head of trade for Asia-Pacific said:

“We are hoping that we will have something by end of the year, maybe the first quarter of next year, where will we know from Voltron what it costs, at which point, a lot of banks who might be sitting on the sidelines will be able to make a decision. Clearly we are hoping that through this technology, the unit cost of doing a transaction comes down, along with other benefits, such as speed.”

Needless to say, the major purpose of using blockchain was to speed-up the entire trade-settlement process. The existing paper-based process takes around 10 days for the exchange of documents in a traditional manner. However, by using the blockchain technology, the exchange of electronics document took place in only 24 hours.

Using the Voltron platform, HSBC could completely digitize the end-to-end exchange of information among all the parties. According to the lender’s statement, some of the other benefits include the instant and simultaneous transfer of assets, eliminating the counterparty risks, reducing the settling costs, and most importantly settling transactions in real-time.

About Voltron Blockchain Network

The Voltron is a blockchain-based platform having open industry standards and used for the digitization of the trade finance documents on R3 or the Corda blockchain platform. By partnering with some of the global banking institutions, HSBC created the Voltron platform with the aim to include more members in this ecosystem over time.

HSBC has been heavily experimenting with the blockchain technology for processing foreign exchange transactions as well! Earlier this year in January 2019, HSBC committed to processing more than 3 million foreign exchange transactions using the blockchain technology. HSBC has likely processed over $250 billion transactions so far.

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