Shanghai Stock Exchange Gets Greenlight from the CSRC to Carry Out Blockchain Pilots
China has been pushing hard to bring blockchain technology into as many industries as it can. Both state and local governments have been introducing long-term plans to further develop blockchain technology and facilitate the creation of new businesses in the industry.
One of the largest financial regulators in the country, the China Securities Regulatory Commission (CSRC), has introduced its own plan earlier today, where it laid out the steps businesses and other entities should take in order to develop and adopt blockchain technology. According to a report from STCN, CSRC’s plan will focus on five different regions in China and allow them to participate in “pilot projects” testing out distributed ledgers.
The plan, titled “General Approval Letter for Five Regional Equity Markets, including Beijing, Shanghai, Jiangsu, Zhejiang, and Shenzhen, to Carry out Blockchain Construction Work,” will probably bear the most significance to the Shanghai Stock Exchange. A representative of the company told STCN that it will soon begin its own pilot project, which will include constructing a blockchain network that will be used by the entire region’s equity market. The Shanghai Stock Exchange will explore the application of blockchain technology in private equity registration and custody scenarios based on the tamper-proof, traceable, and transparent characteristics of blockchain technology.
The company will also utilize distributed ledgers to integrate online transactions, transform the process of disclosing information about listed companies, and build an equity registration system for businesses.
This, however, is still a long way ahead. Reports have shown that the company has so far managed to establish a special working group tasked with building the central blockchain system. The working group, which the Shanghai Stock Exchange refers to as an “equity registration trusteeship”, will spend the following months sorting out the information and establishing the data structure that will go on-chain.
While this isn’t the first region-wide effort to introduce blockchain technology in China, focusing on equity markets could have a much more immediate effect on blockchain adoption. CSRC itself stated that introducing blockchain technology to regional equity markets will further exert the market function of the regional equity market to serve small, medium, and micro-enterprises.
China’s securities commission will take on a very hands-on approach with the Shanghai Stock Exchange—the company said that will actively explore connections with other financial infrastructures under the guidance of the CSRC. Building lasting relationships with payment providers and financial institutions will enable it to improve the regional equity market blockchain ecosystem, the Shanghai Stock Exchange told STCN.
If successful, this could have a huge impact on the economy in Shanghai—the Shanghai Stock Exchange Center currently lists more than 10,000 companies and provides a wide variety of services that, when combined with blockchain technology, could further increase that number. As a whole, the Shanghai Stock Exchange Center provides a wide array of financial services, including equity financing (currently exceeding 250 billion yuan), transaction transferring, company registration and custody, as well as information disclosure.