China Are Blocking Bitcoin As The Banks Expand To The Blockchain
According to reports out today, the Bank of Communications, one of the four major state banking groups in China have completed a major transaction on the blockchain, one that has seen the issue of residential mortgage backed securities (RMBSs) on a blockchain network.
The issuance of this RMBS has a value of around $1.3 billion according to Coindesk. The Bank of Communications is alleged to have been the main bank behind this, though some involvement may have also come from the China International Capital Corporation, the Commercial Bank of China and the China Merchants Bank.
What are the benefits to an RMBS on the blockchain?
There is an advantage to placing credit data such as this on the blockchain as it will allow numerous parties within insurance and banking to access up to date information in order to ensure their own transactions are settled with the most up to date data. By using blockchain technology, the state owned banks in China are improving transparency between themselves and are improving the way data is handled and thus, the way transactions are made and approved.
Which blockchain was used?
It seems that a state built blockchain was used on this occasion, a blockchain that has been named the Jucai Chain. According to Coindesk:
âThe Bank of Communications first rolled out the Jucai Chain blockchain platform in June, specifically for asset-backed securities, in an effort to speed up the issuance process. After the initial launch, the bank started moving mortgage data of the securities batch onto the blockchain in July, the news source said. Other commercial banks in China have also recently announced various asset-backed security issuances via distributed networks. For instance, the Agricultural Bank of China, another state-owned institution, offered a loan worth $300,000 using a blockchain system in the country's Guizhou province in July.â
With many banks in China exploring the technology, itâs clear that this isnât the first or last time huge transactions will be made between Chinese banks on the blockchain.
Overall, this is a huge contrast against the way banks and authorities in China are seeing cryptocurrency. With an all out ban expected to be implemented soon, itâs surprising that the authorities are still keen to adapt for and work with the blockchain. It is a good thing overall and at the very least, we can use this to confirm that there is still a future for the blockchain in China, even if crypto becomes a thing of the past.