HSBC Performs World's First Trade Finance Transaction Using Blockchain

HSBC said it had completed a blockchain transaction with ING Bank

HSBC said on Monday it has made what it claims is the world's first commercial trade-finance transaction using blockchain.

The exchange was for the bulk shipment of soybeans by Cargill from Argentina to Malaysia.

HSBC also revealed that the transaction was completed on a platform called Corda, developed by the New York-based blockchain consortium R3. The incentive? HSBC sees blockchain as a solution to help boost efficiency in the multi-trillion-dollar funding of global trade.

HSBC's head of growth and innovation, Vivek Ramachandran, noted that thanks to the development, "trade finance transactions have been made simpler, faster, more transparent and more secure". That's far quicker than the five to 10 days normally needed. While the letter of credit was exchanged over the blockchain, while bill of lading and other transaction elements were not, the report adds.

Handling the deal for United States food and agricultural group Cargill, HSBC issued a letter of credit to Dutch ING Bank NV. The transaction was an end-to-end trade between a buyer and a seller and their respective banks that was completed on one shared digital application rather than multiple systems.

Despite their general hostility towards cryptocurrency industry, a growing number of banks have started embracing its underlying technology-the blockchain.


The LC was issued by HSBC, with ING acting as the advising bank.

With the technology making great headway with the world's first commercially viable trade finance transaction it demonstrates the potential it could soon have with other sectors in the future.

Ivar Wiersma, Managing Director, Innovation Wholesale Banking, ING, said: "It's exciting to see this transaction has been completed successfully with clear client benefits in speed and ease in execution".

Trade experts believe blockchain may be shipping's answer to how it can reduce the time it spends on paper-based processes.

"It is only by working together that we will create a platform that all those involved in trade want to use, from banks, exporters and shippers to regulators and lawmakers".

R3 and the group of 12 banks supporting the Corda application are seeking to expand the network on an open basis to drive adoption across the industry.

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