Open Trade Finance Network Launches in Singapore
The trade finance market in Singapore has got a major upgrade with the launch of Contour, an open trade finance network. The network will be initially focused on Letters of Credit (LoCs) issued between banks, which can at times exceed more than a hundred pages, and these exchanges typically occur across country borders. Of course, in the case of this project, the launch is relatively ‘soft’, as the network is still in a beta stage. According to IBS Intelligence, the network is backed by Bangkok Bank, BNP Paribas, CTBC, HSBC, ING Bank, Standard Chartered, SEB, Bain & Company, CryptoBLK and R3. The independent global network is built on R3’s Corda blockchain. R3 will be tasked to provide support and expertise to Contour.
A huge opportunity awaits
Contour’s CEO, Carl Wegner, believes there is a huge opportunity in trade finance as trillions of dollars in commodities, products and services are transacted daily, but the sector is still mired in a sphere where slow, duplicative and costly processes are still the de facto standard. “Contour delivers a network where trusted information is shared in real-time, effectively digitising Letters of Credit across all users in the transaction,” he added. Contour is now totally focused on scaling networks with banks as they are now able to provide full commercial service to organizations looking to enhance their trade finance practices. HSBC’s global head of trade products and propositions, Vinay Mendonca, also chimed in by saying that digitizing LoCs reduces friction, helps accelerate the velocity of trading and allows all participants to control their own data. Apparently, there were live pilot programs in 14 countries prior to the launch with a global trial with over 50 banks and corporate entities. A massive decrease in processing times for LoCs by over 90 percent from five to ten days to 24 hours demonstrated the power of blockchain technology to save time and cost across the board.
Singapore Forges Ahead
The republic is forging ahead with new payments legislation that offers global cryptocurrency firms a chance to grow their operations in the country. The ‘Payment Services Act’ is a first in terms of comprehensive regulation for companies to handle activities that can range from digital payments to trading of tokens such as Bitcoin or Ether. The Monetary Authority of Singapore (MAS) will now have supervisory powers to mitigate cyber security risks and provide oversight in terms of preventing money laundering and terrorism financing. The country is now on track to catch up with Japan, which is a major Asian center for cryptocurrency trading, with at least 22 exchanges receiving their licenses to operate freely back in 2017. Speaking to EdgeMarkets, the founder and CEO of Ethikom Consultancy, Nizam Ismail, believes that the country’s new legislation will provide clarity on e-wallets and cryptocurrency exchanges as well.
It seems that Tokyo-based crypto exchange operator Liquid Group Inc. and London-based Luno, which already operate in Singapore, are planning to apply for licenses. Luno’s Singapore general manager Sherry Goh, is also of the opinion that the legislation provides regulatory certainty to industry players and consumers will also gain a clear picture of trustworthy players within the ecosystem. According to Chainalysis data, 20 of the top 50 crypto exchanges are based in the Asia Pacific region and accounted for about 40 percent of Bitcoin transactions in the first half of last year.
Source: Asian Blockchain Reviews