HSBC on September 3, accomplished the first RMB denominated Blockchain letter of credit (LC) transaction using the Voltron platform. The transaction was denominated in Yuan currency of China using the trading platform of Voltron.

Why Voltron platform?

Voltron is developed by R3’s Corda technology with the involvement of eight major financial banks across the globe. The platform is still in the primary phase of development and is expected to launch at the end of this year or in early 2020.

Voltron is designed to moderate transaction costs and the overall processing time using Blockchain technology. It thus provides faster transactions and low-cost operations than the current paper-based process.

The Transaction particulars

The LC transaction was done in favor of Hong Kong-based audiovisual MTC Electronic (raw material exporter) to Shenzhen MTC, the Mainland-based parent company. Letters of credit are widely used to carry out international financial transactions. Banks issue a formal guarantee for the payment from the buyer’s side to the seller after receiving the shipments.

The transaction process was accomplished within 24 hours, including the transfer of shipment documents with Voltron’s letter of credit platform. This process conventionally takes 5 to 10 days including paper-based work of letters of credit.

HSBC towards more digital automation

According to the data released by SWIFT, China is the largest issuer of letters of credit in the world.

The data in the single year of 2018 reveals that 1.2 million LCs worth 750 USD were being transacted throughout the year in China.

“Shorter turnaround times mean improved working capital and better control of cash flow,” says Ajay Sharma, Regional Head, HSBC.

Ajay Sharma also said, “ the more use of Blockchains will reduce complexities in transactions and will eliminate the bad repute of letter of credits. With the use of Voltron, we are moving towards building a more acceptable commercial platform.”

HSBC has been credited for accomplishing the world’s first cross-border Renminbi- denominated blockchain-powered letter of credit (LC) transaction. This is one of the steps of HSBC to stay ahead in integrating the latest technology with its operations. The move is observed as a milestone in HSBC’s policy to automate the paper work-based system into digital ledger technology.

Published by Darius Baughman

Darius is a crypto expert and deals with various cryptocurrency exchanges. He also expertise in Ethereum news and writes latest news for ethereumnews.live. He has also worked as a freelance content writer for 2 years.