China’s Zheshang Bank Uses Blockchain to Issue $66 Million Worth of Securities
Chinese Bank Becomes First Every Institution To Issue Securities Over Blockchain
National joint-stock commercial bank, China Zheshang Bank (CZB) has officially become the first ever bank in the country to have issued the largest number of securities – worth over $66 million through blockchain technology.
According to Coin Desk’s report, it seems to have taken CZB a rather short period of time to achieve their goal. The initial step was supposedly made on August 13, where the bank filed for prospectus with Shanghai Clearing House indicating that securities will be backed up by various account receivables (A/R) accounts from different companies.
The China Securities Journal reported that the Zheshang bank achieved its goal of issuance in as little as four days after filing for prospectus.
So, how does blockchain play into all this? It has been revealed that CZB created Lianrong, a blockchain platform. This was supposedly done to bring firms under one roof, that is so that they can announce about their A/R accounts to investors, and conduct exchanges on a P2P manner.
One might wonder how this might benefit investors in any way. It turns out that said investors will be paying a firm’s A/R balance at a discounted rate and when the original payee pays up (i.e. the full amount), it goes back to the investor. Hence, the A/R clears up and the investor gets his/her cut.
Will this move prove to financial instituitions and firms that blockchain is highly likely to revolutionize the finance sector? Share your thoughts below.