distributed ledger technology

Korea’s Jeju Island Introduces Blockchain-Fueled COVID-19 App for Tourism

To recover from COVID-19 tourism losses, South Korea has introduced a blockchain-powered digital app for visitors of Jeju Island to ensure safe travels.

Even among South Koreans, Jeju Island is a hot spot for tourism and boasts of approximately 15 million visitors per year.

COVID-19 Travel App

In order to stimulate the tourism industry during COVID-19 and to ensure safe traveling for all, a decentralized identity (DID) blockchain-fueled digital app was presented by South Korean Blockchain company ICONLOOP Inc. to ensure that COVID-19 contact tracing is secured. The mobile application, dubbed “Zzeung,” will be used to verify visitors’ identities when they arrive on the island. Through a verified credential on the application that will be emitted via a public blockchain network, users’ private information is guaranteed to be secured and safe from tampering.

Through the COVID-19 safety mobile app, visitors will be required to set up a personal fingerprint authentication or a PIN code to secure their profile. The information will be stored in a private blockchain network. Each visitor’s logs of visited places and identity-related information will be stored separately on the chain. All information is kept private unless there is confirmation of a COVID-19 case.

Blockchain Is the Future

With the adoption of a digital blockchain-fueled app like Zzeung, many in the blockchain industry think that this may create new ventures for the industry, and blockchain may be adopted by even more companies after COVID-19 has passed.

With the issuance of Zzeung mobile app, Korea’s Financial Services Commission has also publicly stood by the “innovative financial service” and advocated for its security and efficiency.

Blockchain Digitizes Driving Licenses

Jeju Island will not be the first to leverage blockchain technology to improve and enhance its public services.

Earlier this year, blockchain-powered driving licenses were made available to the South Korean population, replacing the traditional physical driver’s card. The blockchain-based driving license is reported to have already one million South Korean drivers subscribed to the innovative application. This translates to more than 3% of the entire driving population in South Korea.

With blockchain being increasingly leveraged for its security, transparency, decentralized features, and more, Asian countries are increasingly adopting the distributed ledger technology in their day-to-day business life to offer more efficient transactions.

PwC: Blockchain Technology Has the Potential to Boost Global GDP Up $1.76 Trillion By 2030

In an analysis of blockchain’s impact on businesses and global economies, PricewaterhouseCoopers (PwC) indicates that by 2030, the impact of blockchain could be so significant that the technology has the potential to boost global gross domestic product (GDP) by $1.76 trillion.

How could blockchain benefit the world?

While blockchain is most known as the underlying infrastructure supporting cryptocurrencies, PwC experts reviewed other key advantages of the distributed ledger technology (DLT).

The new report released by PwC assessed how blockchain technology could be leveraged to benefit and boost the economy worldwide. Five case scenarios in which blockchain could be used to drive the digital revolution forward included provenance – the tracking and tracing of products and services – payments and financial services, identity management, and the application of blockchain in contracts and dispute resolution as well as customer engagement.

The analysis evaluated blockchain technology’s potential across different industries, from healthcare, government and public services to finance, logistics, retail, and more.

Speaking about the potential ways blockchain technology could be used, Steve Davies, a Partner and Blockchain Leader at PwC UK, said:

“Blockchain technology has long been associated with cryptocurrencies such as Bitcoin, but there is so much more that it has to offer, particularly in how public and private organisations secure, share and use data.”

Who would benefit the most from blockchain?

According to PwC analysts, Asia stands to reap the most economic benefits from blockchain technology over other continents.

In terms of countries, China and the US were designated as the ones that could potentially gain the highest net benefits from blockchain, estimated at $440 billion and $407 billion respectively, according to data from PwC. The net benefits of five countries, notably Germany, Japan, the UK, France, and India were also calculated to surpass $50 billion.

However, from one country to another, the sectors that would reap the highest benefits from blockchain technology differed. While the US stands to benefit the most from leveraging blockchain for security, payments issuance, identity, and credentials purposes, China and Germany would gain from using DLT more for provenance and traceability, as both countries possessed manufacturing-focused economies.

Overall, across all sectors, the public administration, healthcare, and education industry appears to be the biggest beneficiaries, with PwC expecting them to gain approximately $574 billion by 2030 through using blockchain for identity and credentials.

Blockchain adoption accelerated by COVID-19

Speaking of blockchain digital innovation and of its budding potential amid the economic havoc caused by the coronavirus pandemic, Davies remarked:

“As organisations grapple with the impacts of the COVID-19 pandemic, many disruptive trends have been accelerated. The analysis shows the potential for blockchain to support organisations in how they rebuild and reconfigure their operations underpinned by improvements in trust, transparency and efficiency across organisations and society.”

Findings from PricewaterhouseCoopers revealed that two-thirds of CEOs surveyed – 61% of them – placed “digital transformation of core business operations” among their top three priorities in their quest to rebuild their commerce from damage caused by COVID-19.

If blockchain’s economic potential was achieved, PwC and sector experts warn that the distributed ledger technology’s energy overhead must be managed properly. The impact of technology and global energy consumption by various organizations must be taken into consideration to reduce climate change repercussions.

StanChart and UnionBank of the Philippines Collaborate on PoC of $187 Million Blockchain-Powered Bond

The UnionBank of the Philippines and Standard Chartered (StanChart) have created a proof of concept required in the issuance of a blockchain-powered retail bond. The blockchain platform intended for bond tokenization was co-developed by SC Ventures, StanChart’s innovation and ventures arm, and UnionBank.

Bond tokenization

The tokenized retail bond worth $187 million (9 billion pesos) was mirrored on the blockchain platform and involved a three and 5.25-year dual issuance. According to the announcement:

“Orders received were tokenized and stayed within existing retail bond guidelines. The tokens issued mirrored the traditional transaction but were not allocated directly to investors.”

Ephyro Luis Amatong, a commissioner at the Philippines’ Securities and Exchange Commission, noted that the result could be instrumental in measuring the effectiveness and efficiency of tokenization and the distributed ledger technology (DLT).

Addressing the needs of retail investors

According to Aaron Gwak, StanChart’s head of capital markets, the use of blockchain technology, tokenization, and DLT could be a game-changer in making the bond market accessible to retail investors. He acknowledged:

“The bond infrastructure around the world has been designed primarily for institutional investors and involves a number of intermediaries to buy and subsequently trade bonds, making it less accessible to retail investors.”

Jose Hilado, UnionBank’s CFO added:

“The marriage of a digital order-taking platform and backend infrastructure driven by tokens is the future of retail bonds. We are keen to see the day when investors can buy and sell bonds, even on the secondary markets, at a click of a button on their phones.”

In September, Thailand’s central bank deployed a blockchain-enabled platform in the issuance of government bonds to improve investor’s buying experience, boost operational efficiency, and minimize costs.

In other news, StanChart CEO Bill Winters recently disclosed that the widespread creation and mass adoption of digital currencies was absolutely inevitable.

SBI Ripple Asia Powers Cambodia’s First Cross-Border Remittance Corridor Using RippleNet

SBI Ripple Asia, a joint venture between SBI Holdings and Ripple, will be facilitating Cambodia’s first international remittance service using blockchain technology.

In collaboration with SBI LY Hour Bank, which is a subsidiary of SBI Holdings, SBI Ripple Asia will enable money transfers between Cambodia and Vietnam to be faster, cheaper, and more convenient – thanks to RippleNet, Ripple’s distributed ledger-based payments network. RippleNet is a financial service offered by Ripple that utilizes XRP to settle real-time transactions between currencies in an efficient, frictionless, and convenient manner. On behalf of SBI Group, Yoshitaka Kitao, the bank’s CEO, said:

“We will pursue synergies to the maximum in the future by generously providing new technologies such as distributed ledger technology (DLT) promoted by the SBI Group to companies inside and outside the group, especially in the rapidly developing Asian region. We would like to lead the globalization of finance utilizing cutting-edge technology, such as by leading to the development of a money transfer service that incorporates crypto assets.”

Through the partnership, a payments corridor between Cambodian and Vietnam banks will be enabled. Payment services will be offered at low fees and will be settled in real-time leveraging blockchain-based technology.

Despite Ripple’s setbacks with the US Securities and Exchange Commission, which alleges that XRP is operating as an unregulated security in the United States, SBI Group has been a firm ally of Ripple, even when partners such as MoneyGram have put a hold on their collaboration with the fintech startup. Thanks to this, XRP adoption has significantly grown in Asia amid the lawsuit Ripple faces in the US.

According to a recent earning report released by Ripple, the company managed to increase its XRP sales by 97% in the first quarter of 2021. This translates to sales of $150.34 million in XRP for Q1 of 2021, as compared to net sales of $76.27 million in Q4 of 2020. Needless to say, XRP has continued to thrive despite the legal battle Ripple is currently fighting.

After the court case is resolved, there may even be a possibility of Ripple taking the company public. Recently, CEO of SBI Group Kitao publicly expressed that he wished to see the company go public after the court case with the SEC has been settled. This aligns with CEO of Ripple Brad Garlinghouse’s visions for the company, as he had previously stated during interviews that Ripple aspires to conduct an initial public offering (IPO) in the future.

HSBC to Issue Digital Bonds to Institutional Investors through Tokenization Platform

Multinational banking giant HSBC has revealed plans to issue digital bonds to corporates and financial institutions through its new proprietary tokenization platform called HSBC Orion.

By harnessing the power of distributed ledger technology (DLT), HSBC Orion will enable token-based transactions. As a result, attain digital delivery versus payment.

Per the report:

“The platform leverages blockchain technology as a ‘single source of truth,’ whereby asset and settlement tokens sit natively and securely on the platform’s ledger.”

Therefore, HSBC Orion is eyeing the first-ever GBP tokenized bond issuance in accordance with Luxembourg law.

Once rolled out, HSBC Orion will be expanded to other asset classes and locations.

John O’Neill, HSBC’s global head of digital asset strategy, markets, and securities services, pointed out:

“Digital assets are a fast-growing part of financial markets. Our clients are demanding solutions that can deliver the benefits of tokenization within a trusted and secure environment.”

Since tokenization presents opportunities for fixed income, like improved operational performance and faster processing, HSBC Orion is deemed a stepping stone towards this objective.

O’Neill added:

“We are excited to be meeting this growing need by launching HSBC Orion, our strategic platform for tokenized assets. We plan to use HSBC Orion to facilitate further digital bond issuance and expand its usage to other products in 2023.”

For his part, Zhu Kuang Lee noted that HSBC Orion would offer a secure and trusted backbone for the issuance of tokenized bonds.

The chief digital, data, and innovation officer at HSBC Securities Services said:

“We believe that tokenization solutions complement and expand HSBC’s best-in-class custody and asset servicing capabilities, and we plan to widen our support for digital assets in 2023.”

Meanwhile, HSBC recently conducted a blockchain-based trade finance transaction between SAIC Motor, a Chinese car manufacturer, and Taajeer Group, the exclusive agent for MG cars in Saudi Arabia, Blockchain.News reported.

HSBC acknowledged the use of DLT had the potential to revamp the trade finance sector by slashing transaction times to less than 24 hours from the present five to ten days.

Bank of England Tests DLT Settlement System

The Bank of England and the Bank for International Settlements (BIS) Innovation Hub London Center have successfully tested a distributed ledger technology-powered settlements system between the institutions. As a result, the Bank of England will use the insights from this project in its real-time gross settlement (RTGS) system.

The joint pilot project, called Project Meridian, was recently documented in a report published by BIS on April 19. The 44-page document highlighted the successful synchronization of distributed ledger technology (DLT) between the banks for the purchase of houses in Wales and England.

This synchronization network allowed for the transmission of messages between the synchronization network and RTGS system using APIs, providing a generic interface that could be “relatively easily” extended to other asset classes, such as foreign exchange. By extending this system to other asset classes, it could significantly reduce the time, costs, and risks of transactions.

The Bank of England and BIS have been exploring the potential of DLT for financial settlements and transaction processing for several years. They have been working on multiple projects, including a cross-border payments project called Project Stella, which was completed in 2019.

The Bank of England has also been developing its own RTGS system, which is set to be launched in 2022. The new system will be built on modern technology and will replace the current system, which has been in operation for almost 20 years. The integration of DLT technology into the new RTGS system could further enhance its efficiency and security.

DLT technology, also known as blockchain, has the potential to revolutionize the financial industry. Its decentralized and transparent nature allows for secure, efficient, and cost-effective transactions, without the need for intermediaries. It has the potential to streamline the financial system and reduce the risk of fraud and errors.

The successful completion of Project Meridian is a significant milestone in the exploration of DLT technology in financial settlements. The potential for extending the system to other asset classes could significantly enhance the efficiency and security of financial transactions, which would benefit the entire industry.

In conclusion, the Bank of England and BIS Innovation Hub London Center have successfully tested a DLT-powered settlements system through Project Meridian. The synchronization network allowed for the transmission of messages between the synchronization network and RTGS system using APIs, which could be extended to other asset classes, reducing the time, costs, and risks of transactions. This is a significant milestone in the exploration of DLT technology in financial settlements and could enhance the efficiency and security of financial transactions in the future.

DLT in Capital Markets: A Strategic Assessment of Opportunities and Risks – A Report by the Global Financial Markets Association

The Global Financial Markets Association (GFMA) has released a comprehensive report examining the opportunities and challenges presented by Distributed Ledger Technology (DLT), including DLT-based Securities and associated activities across the securities lifecycle.

The report, developed in collaboration with GFMA member firms, incorporates the insights of industry practitioners at the forefront of DLT use cases research and application worldwide.

The report indicates that innovation in distributed computing and data encryption, embodied in DLT and the emerging digital asset ecosystem, could have a fundamental impact on the next major wave of capital market developments. The technology is seen as a potential catalyst for operational efficiency, cost savings, product innovation, broader market access, and new liquidity pools.

The current focus is ensuring that DLT applications meet regulatory requirements and mitigate any potential risks associated with the use of this new technology. Several jurisdictions are introducing sandboxes or pilot regimes to facilitate firms’ experimentation with and issuance of DLT-based products. Live use cases in capital markets, profiled in the report, are already beginning to capitalize on opportunities and deliver benefits to clients while remaining compliant with existing rules and regulations.

The emergence of DLT and the digital asset ecosystem represents a critical juncture. As regulators worldwide formulate policy to govern the ecosystem, it is crucial to ensure stability and protections for market participants in digital asset markets. The report aims to guide policymakers and market participants in identifying regulatory, supervisory, and risk management practices that not only offer stability and protections but also permit the industry and economy to leverage the benefits of DLT.

Despite the growing momentum behind DLT use cases, there is yet to be widespread adoption of DLT-based Securities. DLT-based issuances have been largely experimental, and liquidity in Primary and Secondary Markets remains significantly below the levels expected in the long term. The report warns that siloed approaches and diverging regulatory regimes could hinder progress towards a broader, coordinated DLT-based ecosystem.

To foster confidence among industry participants, the GFMA underscores the need for cross-industry consensus. This consensus should aim to promote development around specific use cases and encourage stakeholders to proactively shape the emerging ecosystem in its foundational phase of development. In response, the GFMA and its members have proposed five calls to action to overcome existing adoption barriers and further the development of DLT-based capital markets. These calls to action are targeted at industry participants and regulators alike.

Federal Reserve's Bowman Discusses Digital Currency Innovations Amid CBDC Debate

On October 17, 2023, Governor Michelle W. Bowman of the Federal Reserve Board addressed a roundtable at Harvard Law School, delving into the contemporary discourse surrounding innovations in money and payments. The talk comes at a pivotal juncture as digital assets like crypto-assets, stablecoins, and Central Bank Digital Currency (CBDC) continue to pique the interest of financial institutions and regulators alike.

Governor Bowman underscored the burgeoning interest in digital assets, highlighting the ongoing developments in CBDC, stablecoins, and other digital assets, which are perceived as potential game-changers in the financial arena. She acknowledged the technological advancements embedded in programmable payment platforms and distributed ledger technology (DLT), indicating that they present an opportunity to enhance the existing payment infrastructure.

Bowman pivoted to the topic of CBDC, articulating her stance on the debate surrounding the introduction of retail CBDC in the United States. She emphasized the necessity to delineate the problems a CBDC is intended to solve and to consider any alternative solutions. Notably, Bowman contended that existing payment system improvements like the FedNow Service might offer more efficient solutions to the identified problems than a hastily introduced CBDC. She expressed concerns about potential risks and trade-offs a U.S. CBDC might entail for the financial system, especially regarding consumer privacy and the robustness of the banking system.

Delving into stablecoins, Governor Bowman pointed out their origins to support crypto-asset trading but noted their evolving use as an alternative to traditional payments. She outlined the regulatory gaps, emphasizing that stablecoins lack the stringent regulation and safeguards characteristic of traditional financial systems. This regulatory void, according to Bowman, could possibly expose consumers and the broader financial system to unforeseen risks.

Governor Bowman called for a clear and sensible regulatory framework to accommodate private sector innovations within established guardrails. She highlighted the disparity in regulatory scrutiny between stablecoin issuers and traditional banks, advocating for a level playing field to ensure consumer protection and to uphold the integrity of the financial system.

The discussion transitioned to wholesale payments, where Bowman explored potential technological advancements that could be leveraged to improve wholesale payment infrastructures. She highlighted various models, including the concept of a shared ledger to facilitate digital asset transactions and DLT as a bridge to achieve interoperability between distinct ledgers.

Bowman emphasized the importance of continuous research to understand and navigate the evolving digital landscape. She endorsed a collaborative approach with international counterparts to share insights and understand the implications of digital payments innovations on a global scale.

Governor Michelle Bowman advocated for a responsible approach towards financial innovation, emphasizing the need for a comprehensive regulatory framework to ensure the stability and efficiency of the U.S. financial system amidst the digital evolution.

BondbloX Secures $6M in Series B Funding Led by Beacon Venture Capital

Singapore-based Fintech BondEvalue Pte. Ltd. has added new investor Beacon Venture Capital, the corporate venture arm of Thailand’s Kasikornbank, to its cap table as part of a US$6m Series B round, according to official announcement. Beacon Venture Capital joins existing shareholders MassMutual Ventures and Citigroup who also participated in the round.

Other investors include existing shareholders Potato Productions, a company helmed by entrepreneur Lee Han Shih, and Octava, a Singapore-based family office.

The latest round follows a Series A raise of US$6m in 2021. This additional funding will allow the Company to scale BondbloX Bond Exchange (BBX), its digital exchange for trading fractional and full-size bonds, as well as grow its international expansion to Gujarat International Finance Tec-City (GIFT City) in India, which recently went live.

Powered by distributed ledger technology, BondbloX enables investors to buy and sell bonds in denominations of US$1,000 instead of the usual US$200,000, and through a public exchange where prices are highly transparent.

BBX has seen strong interest from global clients since launching the platform to individual investors last month. BBX also has future plans to list US Bonds (Treasuries as well as Corporate Bonds) on the platform.

This announcement follows the announcement made last month that Citi is the first digital custodian participant of BondbloX Bond Exchange (BBX) for the institutional market. The partnership will allow Citi’s clients that meet certain criteria to become BBX participants and begin trading bonds (both fractionalised and full-sized) almost immediately.

“We are immensely honoured to welcome Beacon VC to our Series B round, as well as other new and existing shareholders including Citi and MassMutual Ventures,” said Dr. Rahul Banerjee, Co-Founder and CEO. “The bond market is broken globally, and BondbloX is on a mission to allow individual investors the same access to the market that institutional firms enjoy. We look forward to working together with Beacon VC and other investors to redefine Bond investing” he added.

In joining the recent round Thanapong Na Ranong, Managing Director of Beacon VC, said, “BondbloX is truly innovating Bond investing and disrupting an asset class which has lagged in digitization. The use of distributed ledger technology coupled with traditional financial custodians excites us and has great potential to re-shape the bond market for all.”

Henry Salmon, Head of Investments, Securities Services, Citi, said: “The digitization of markets, assets and processes is an accelerating industry trend and a key investment theme for Citi. We are delighted to continue our investment in BondbloX. I believe their embrace of new technology and the innovation in the bond market has delivered a unique value proposition.”