Shanghai Coal Exchange Complete the First Blockchain-Based Securitized Financing for Bulk Commodity
SHANGHAI DEC 18, 2018 – China’s first blockchain-powered securitized financing for bulk commodity has been successfully conducted by Shanghai Coal Exchange.
The batch of business consists of six coal trade transactions, totaling 104,000 tons. The financing process was completed on the “CSCE Blockchain Platform” which is jointly built and operated by Shanghai Coal Exchange and BravoWhale Technology, with the financed amount totaling 62.627 million yuan (roughly $9mln).
Founded in 1992, Shanghai Coal Exchange is the only national coal exchange in the country, mainly providing services including transaction matching, contract and order management, payment and settlement, as well as big data analysis for upstream and downstream enterprises in the energy industry.
According to its chairman, “China’s coal industry is currently very poor in financial liquidity, and the funds in the trade chain are mostly supplied at both ends. In this context, the coal traders in the middle sector have quite large capital pressure, as most of these enterprises are privately owned, and it is difficult for them to obtain financial support from the existing traditional financing methods via mortgage or guarantee.”
By leveraging blockchain and IoT (Internet of things) technologies, migrating contract, orders, delivery and logistic info onto blockchain, meanwhile bringing in external finance, the new mode will help the intermediate coal traders obtain a large amount of low-cost external capital and increase the liquidity of the whole coal trade chain, so as to stabilize the volatile coal price to a certain extent and play a role in the market regulation.
“There are few real practical blockchain applications at present. This CSCE Blockchain Platform can be said to be the real first step in the field of commodity trading. The landing of this platform, in fact, has a very profound reference significance not only for the coal industry, also for other real industries. It is worth exploring the direction of using blockchain technology to prevent financial risks.” Said deputy director general of Shanghai Free Trade Zone.
In the view of Zhu Shaokang, CEO of BravoWhale, a Shanghai-based blockchain solution provider for SME financing and technical support of this financing, he believes the implementation and operation of this platform is a typical case that blockchain technology could be applied to substantial industry for real financial transactions. The use of blockchain technology to increase the securitization of commodity assets has a great prospect, which is not only limited to coal, but also applicable to domestic rice, cotton, soybean, etc., and even can be expanded to the world in the future, such as oil and other international trade.
Earlier this year, Chinese petrochemical giant Sinochem Group has successfully leveraged blockchain technology to conduct a gasoline shipment from Chinese city Quanzhou to Singapore.