Chinese BoC Issues $1.3 Bln in Securities On The Blockchain

One of the four state-owned banks in China, Bank of Communication has issued residential mortgage-backed security (RMBSs) through the blockchain network. A similar step is already taken by other commercial banks and the Agricultural Bank of China.
The Communication Bank of China revealed a month ago that it had partnered and launched the Jucai Chain blockchain platform in June purposely for asset-backed securities and also speeding up its issuance of Residential Mortgage-backed Securities (RMBSs). The procedure to hasten the issuance also started in July.
After two months of the process of securities issuance on the blockchain, the official press of the Chinese financial regulator reported on September 27th that the Bank of Communication had finished issuance of a total of 9.3 billion Yuan (or around $1.3 billion) value of RMBSs through Jucai Chain blockchain network.
Further, the document that listed the details of the issuance of securities reveals that the main issuer was the Bank of Communication, while the lead underwriter and book runner for the offering was the China International Capital Corporation. Commercial Bank of China and China Merchants Bank also served as other co-underwriter with CICC.
According to the document, the new development to the credit data of the mortgages, which sees its movement to a distributed network will enable different parties involved in the issuance process, view the most up to date information and conduct due diligence and settle transactions in a peer-to-peer mode.
Notably, residential mortgage-backed security is made of pool mortgage loans that are owned by financial institutions. These loans are grouped into trenches depending on their risk and returns, followed by sales to investors.
China’s Bank of Communications’ feat has also been dubbed by commercial financial institutions in the country, on asset-backed issuance through the blockchain network.
For example, the Agricultural Bank of China and another financial institution offered a loan of $300,000 in July through the blockchain technology. Also is a private bank in Zhejiang that provided blockchain-based transactions for a security offering based on corporate account receivables worth $66 million.
Meanwhile, the Chinese government ban on cryptocurrency still stands with the recent prohibition of promotion of ICOs in the country. Despite this, the adoption of the blockchain technology continues as its application to various facet if its society grows.

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