Tech 14 June 2018

Dan Taylor

China’s JD.com prepares for asset-backed securities on blockchain

Chinese ecommerce giant JD.com has announced it is planning to launch asset-backed securities (ABSs) powered by blockchain, in the latest move of its kind to power investment products through distributed ledger technology (DLT).

Issued by its subsidiary JD Finance, in partnership with Xingye Bank and Huatai Securities, the securities will be offered under the oversight of China’s Securities Regulatory Commission, offering investors a regulatory sound option for investing through the blockchain, according to local media reports.

The firm also hopes to establish an asset securitization model as mechanism for reducing risk, and better protecting the interests of investors.

According to the firm’s head of finance, Hao Yanshan, the group will work together with its partners to establish whether blockchain can be used to improve asset security for ABS issues in future. He said, “The alliance chain must meet the actual needs of all participants in the asset securitization business in order to fully reflect the application value of blockchain technology.”

While the move would be an important innovation from the company, it’s far from their first foray into the blockchain space.

Back in March, the firm announced it was launching a Blockchain as a Service (BaaS) platform, in partnership with IBM, Microsoft, Oracle, and several other notable players in the technology space.Around the same time, the firm also announced its work on a new blockchain solution for tracking meat supply chains in China and beyond, just one of many commercial applications of the technology envisaged by the firm.

The move follows JD.com’s launch of their first non-blockchain ABS in 2015, alongside services designed to allow businesses to raise capital by issuing these securities.

The blockchain ABS will be issued on a consortium blockchain platform, with each of the parties acting as a node for maximum transparency.

The China Securities Regulatory Commission was upbeat about the project, and how the JD.com model could help limit the risks to investors in ABSs in future, saying: “The currently established asset securitization business management system is conducive to the prevention of risks of various ABS products and thus protects the interests of investors.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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