China Construction Bank, the second largest asset bank in the world, is working with Malaysian and Singaporean partners to test blockchain technology for use in the bond market.
As previously reported, China Construction Bank’s subsidiary Labuan, Malaysia originally sought to partner with a Labuan-based fintech company to release what was heralded in the future as the first blockchain-based digital security system issued by a Chinese financial institution.
CCB Labuan’s plan was to use the Ethereum blockchain to issue bonds and raise up to $ 3 billion in total, starting with a $ 58 million tranche, from individuals and organizations.
For several days after the announcement, however, the bond issue was postponed until further notice, and the first tranche in the form of symbolic certificates of deposit was not traded on the Labuan-regulated Fusang exchange.
On December 3, a new announcement was made that work on the blockchain-based version has not been completely suspended, but that some of the major players have changed. The national stock exchange in Malaysia, the stock exchange in Malaysia and the stock exchange in Labuan are now participating, and there is no mention of the Fusan stock exchange.
Fusang specifically supports cryptocurrency trading, so it was expected that traders could exchange bitcoins (BTC) for US dollars to buy bonds.
Instead of the Ethereum blockchain, evidence of a link with STACS, a Singapore-based financial technology company specializing in the use of blockchain technology in the capital markets, is currently being studied. STAC has developed a blockchain-based platform called Trident and has won proof of concept grants for financial sector technology and innovation from the Monetary Authority of Singapore.
In addition to CCB Labuan and Bursa Malaysia, other proof-of-concept partners include local regulators, the Labuan Financial Services Authority and the Malaysian Securities Commission, as well as two banks, CIMB Investment Bank Berhad and Maybank Investment Bank Berhad, also known as Maybank. According to the announcement:
“The use of Trident Bond models […] has been reflected in smart contracts for fast distribution, and operational workflows are streamlined to improve the efficiency and flexibility of billing cycles. Together with CCB Labuan, CIMB and Maybank, [Proof The concept] simulates several bond issues issued and managed using the STACS blockchain. ”
The participants claim that this successful collaboration between private sector fintech companies, banks and regulators demonstrates the increased efficiency and transparency that blockchain technology can provide to the bond market. Further joint development of technologies for the next phases of the project is being prepared.