As China continues to vigorously pursue its pro-blockchain, anti-crypto stance, reports out of the country indicate that a state-run bank has issued $1.3B worth of mortgage-backed securities (RMBS) through its bespoke blockchain solution called Jucai Chain.
A September 28 report in the Asia Times makes it clear, however, that regardless of what Chinese state regulators wish, China’s middle classes still retain a high level of interest in bitcoin and other cryptocurrencies.
According to the report, the Bank of Communications (BoCom), a state-owned commercial bank has issued 9.3 billion yuan (roughly $1.3B) of residential mortgage-backed securities using a specially-developed blockchain solution called Jucai Chain.
Under the issuance framework, China International Capital Corporation serves as the deal’s lead underwriter and bookrunner, working alongside the Commercial Bank of China and China Merchants Bank. This reportedly becomes the first-ever RMB market launch using a blockchain framework.
Developed independently, Jucai Chain was launched in June 2018, and it has been busy since then, engaging in the initial phase of a digital RMB launch in July. After conducting due diligence in August, the platform has now been engaged fully with the BoCom mega offering.
Using Jucai Chain, all loan stakeholders will be able to track their assets, perform specific business operations and manage their cash flow on-chain. The bank hopes that the use of blockchain technology will lead to reduced risk, shortened RMB issuance times, and ensure the authenticity of assets due to the blockchain’s immutability.
BoCom is not the first Chinese financial institution to adopt blockchain technology in an effort to aid its business. In July, the Agricultural Bank of China, which is the country’s fourth-largest bank by capitalization issued loans worth about $300,000 over a blockchain platform.
Two months later, Ping An Insurance Company subsidiary OneConnect Financial Technology Co. announced the launch of its DLT-based Asset Backed Securities (ABS) platform.
Middle Classes Maintain Crypto Interest
Despite the best efforts of Chinese government regulators and internet censors, a report in the Asia Times has it that the country’s teeming middle-class population still maintains a deep interest in holding and trading crypto assets.
According to the Asia Times report, new research indicates that despite the government crackdown on ICOs and cryptocurrencies, digital assets still occupy roughly 10 percent of investment portfolios held by the Chinese middle classes.
Published by Wu Xiaobo, a financial writer and university professor from Zhejiang University, the paper attempts to create insights into the investment and spending habits of the world’s largest middle-class population.
According to the research, this group of people is still generally risk-averse, with only 9 percent of them indicating that they would accept a trading loss of 15 percent – which may be a matter of seconds in current crypto markets – but it nevertheless gives an interesting deep dive into the success or lack thereof of Chinese government policy regarding cryptocurrency investment.
It has been reported extensively that Chinese citizens are increasingly finding ways around the government’s crypto exchange ban, ranging from decentralized peer-to-peer exchanges to sophisticated Virtual Private Networks (VPNs), with which they can get around the country’s Golden Shield internet censorship system.
Featured image by Lucas Briceno