Chinese Steel Firm Executes the First Credit Transaction Letter of the Entire Globe Through Blockchain

Chinese steel firm, Baosteel, has used blockchain technology to complete a letter of credit (LC) transaction. Baosteel executed the renminbi LC in collaboration with Rio Tinto, an Australian mining company.

The payment is the first time a cross-border contract, using the renminbi, is done paperless. The transaction was operated by the British multinational financial services firm Standard Chartered Bank (SCB), which is planning to use blockchain technology more widely.

The SCB used Contour, an open-trade finance platform operated by R3’s Corda enterprise blockchain to run and execute the contract. Speaking on the growth, SCB Documentary Trade Chief Samuel Matthew expressed excitement on the bank’s behalf.

“We are pleased to have played such a significant role as the digital LC issuing bank in such a large trade that marks the first RMB-denominated foreign LC between two banks via blockchain.”

Advancement has brought big news for the future of finance and the adoption of blockchain, particularly for international transactions. Some suspect, though, that this is part of a Chinese government strategy to counteract some control the US has through the dollar.

China is now evaluating the digital currency at the central bank. Testing in Suzhou City started in April utilizing transport incentives. Staff at a couple of agencies in Suzhou’s Xiangcheng District were expected to begin collecting half their CBDC transport incentives.