One of the main branches of JD.com will issue asset-backed securities in blockchain. JD Finance, the financial brand of China-based JD e-commerce conglomerate, announced Wednesday that it is planning to issue asset-backed securities (ABS) on the blockchain.
According to the Securities Times, JD Finance, in partnership with Huatai Securities, a brokerage firm that will underwrite future issues, and Xingye Bank, which will act as trustee, established the test from a point of sale of the China Securities Regulatory Commission (CSRC).
The financial firm is planning to issue the securities using a consortium blockchain that will see each of the parties act as nodes of the system, thus recording each of the transactions in a transparent manner.
Blockchain Financial Experiment
One of the purposes of the project is to determine whether the blockchain technology implemented can meet the demands of the various parties involved in the asset securitization process, such as issuers, underwriters and buyers.
The company first launched its traditional ABS product without a blockchain platform in 2015, as well as an online service that helps other companies raise capital through their emissions. This way of working translates into something like a portfolio of loans or credit card debt that can be traded on a secondary market.
The firm issued a cars loan in August 2017 using a blockchain platform, establishing the firm’s initial evidence in incorporating distributed general ledger technology into its financial services, according to regional news portals.
JD.com also announced early in the second quarter that it will launch a proprietary blockchain-as-a-service platform this year, in line with other technology giants such as Huawei, Oracle, IBM and Microsoft. The date of the launch is not yet known.
The company has also been working with distributed ledger technology with the purpose of tracking meet shipments entering to the Chinese market. With this development, the company had the possibility to increase consumers’ trust and provide better products to its clients.
It’s no secret that blockchain is set to revolutionize the banking. Most of the major banking organizations in the world are fervently working on their own blockchain solutions, or operating in a hand-in-glove relationship with platforms that aim to limit the freedom that blockchain technology offers to further their own ends.
The 2008 global financial crisis significantly destabilized the international capital markets industry, which was forced to deal with a never-ending barrage of cash absorption issues that stemmed from the tightening of the regulatory noose. The capital markets industry also suffered from an increase in the cost of liquidity and an increased need for the distribution of capital in an economic climate in which the average income had dramatically declined.
The unique properties of blockchain technology, however, provide banks with a unique exit strategy. Clearing organizations and exchanges see the blockchain as a powerful and highly effective tool that could be used to influence the fundamentals of expenditure.