JD Finance, a subsidiary of Chinese e-commerce giant JD.com, announced earlier today that it is currently working on issuing asset-backed securities (ABSs) on a blockchain.
Blockchain, which is the underlying technology of Bitcoin and other cryptocurrencies, has been gaining a lot of traction over the past few months. The importance of the technology has been recognized by both businesses and governments across the globe.
JD Finance is now concluding plans to issue asset-backed securities on a blockchain. The company made this announcement today, according to a report from the Securities Times, an outlet of the China Securities Regulatory Commission. According to the report, JD Finance is collaborating with Huatai Securities, a brokerage firm who will be in charge of the issuance while Xingye Bank will act as a trust.
JD Finance looking to harness the power of blockchain
The company is looking to issue their securities via a consortium blockchain, where each party involved will act as a node and recording the transactions to make them very transparent. The report added that the partnership will determine if Blockchain has what it takes to meet with the demand of the various groups involved in the asset securitization process. Thus, it would be tested to determine if it would meet up with the demands of the issuers, underwriters and buyers.
The ABS product has been a part of JD Finance’s vision for a long time and it rolled out the first non-blockchain ABS product in 2015. The firm also developed an online service that was designed to help companies raise funds using their issuance. The issuance is given to the companies as a portfolio of loans or credit card debts which can then be traded on the secondary market.
The first loan issued by the firm was an automobile loan back in September last year with the firm making use of a blockchain network. That was the first time that JD Finance ran its first trial in incorporating distributed ledger technology to its financial services.
The company announced two months ago that it will soon launch its first blockchain-as-a-service platform before the end of the year, as they keep up with other tech giants such as Huawei, Oracle, IBM, and Microsoft.
Ant Financial is looking to go big in blockchain development
JD Finance isn’t the only firm looking to go big in blockchain in China. Ant Financial, the subsidiary of the largest e-commerce company in China and the second largest in the world behind Amazon, Alibaba, revealed on Friday that it has raised $14 billion in its series C funding round. Ant Financial, which is created and manages popular payment platform Alipay, added that the funds will be used to boost blockchain development.
Giving further details on that, Ant Financial added that the funding came from both local and foreign sources. The report by The Wall Street Journal revealed that $11 billion was raised in USD while the remaining $3 billion was in RMB.
The funds raised could also see Ant Financial go ahead with its reported IPO plan with the company now valued at around $150 billion. After the series C fundraising rounds, Ant Financial issued a statement saying;
The Company will continue to invest in developing its blockchain, AI, security, IoT, and computing capabilities to upgrade its global technology platform for the next generation.
At the moment, Alibaba has the highest number of blockchain patents globally, standing at 49. The licenses have been revealed to be mostly application-oriented and will be used in different sectors of the economy like public welfare, healthcare, and supply chains.
China embracing blockchain despite cryptocurrency ban
China is perhaps the country that gives cryptocurrency and ICOs the toughest time. The clampdown on cryptocurrency exchanges by Chinese authorities led to the exchanges leaving the country to set up shop somewhere else, with the Chinese government not very tolerant of cryptocurrencies.
The story is different though for Blockchain, which the Chinese government considers to be one of the leading technologies at the moment. Alongside artificial intelligence an internet of things, blockchain is regarded as a technology that has a huge potential for the future and the government is looking to harness the benefits very soon.
World Intellectual Property Organization revealed that a total of 409 blockchain patents were filed last year, with China having the highest, 225 of which 49 belonged to Alibaba as mentioned earlier. Last year, only 178 new blockchain companies were launched in China but that figure has already gone up to 456 so far in 2018, which shows exponential growth in the blockchain industry in China.
The technology received a sudden boost on May 28 when President Xi Jinping stated;
The new generation of information technology represented by artificial intelligence, quantum information, mobile communication, internet of things, and blockchain is accelerating breakthroughs in its range of applications.
The love of Blockchain by the Chinese government has transcended to the companies in the country. The number of companies looking to blockchain to solve some of their problems includes Wanxiang Holdings that co-founded Wanxiang Blockchain Labs with Vitalik Buterin, NEO, VeChain, JD.com, Baidu and many more.