JD.com’s Finance Arm to Issue Asset-Backed Securities on a Blockchain

JD Finance will start an asset-backed securities on a blockchain

JD Finance, a subsidiary of Chinese e-commerce giant JD.com announced earlier on Wednesday that it will soon start issuing asset-backed securities (ABSs) on a blockchain. This latest development was made known to the public by Securities Times, an outlet of the China Securities Regulatory Commission.

According to the report, JD Finance will work on this in partnership with Huatai Securities which will underwrite of the issue while the trusted party will be Xingye Bank. The report added that the test would be carried out to see if blockchain technology would be able to meet with the demands of all the parties involved in an asset securitization process, which usually includes the issuers, the underwrites and the buyers.

The report from Securities Times roughly reads “Huatai Securities Asset Management are putting more emphasis on the application of financial technology in the business field. The currently established asset securitization business management system is conducive to the prevention of risks of various ABS products and thus protects the interests of investors.”

JD Finance has been working on ABS for long

After recognizing the importance of the blockchain technology, JD finance started working on ways to use it to make some of their services better. The firm released its first non-blockchain ABS product in 2015. They also launched another online service that was designed to make it easier for other companies to raise funds with the help of their issuance. The issuance gave by JD Finance usually comes as loans or credit card debts which can then be traded on the secondary market.

The parent company JD.com announced two months ago that it is working on establishing a proprietary blockchain-as-a-service platform before the end of the year, as they look to compete with other tech giants like Huawei, Oracle, IBM, and Microsoft.

JD.com via JD finance is looking to make significant changes to the financial landscape of China and the world. The CEO of the company Liu Qiangdong stated that “We define JD Finance as a partner, but not a subverter, to the financial institutions. We help banks improve their efficiencies in credit authorization by more than ten times and reduce the costs by 70 percent, and by virtue of our AI technologies, the ratio of bad loans and the capital loss rate is about 50 percent lower than the industry average.”

Ant Financial Still Leading the Pack

Ant Financial, the subsidiary of Alibaba and the creator of Alipay announced just yesterday that it had raised $14 billion in its latest round of funding. The firm which is the subsidiary of Chinese e-commerce Alibaba and a competitor to JD financial revealed that this most recent round of funding comes from investors both within and outside China.

According to the report by The Wall Street Journal, the financial company received $11 billion in US Dollars while the remaining $3 billion came in RMB. Reports had earlier suggested that the company was looking to raise just $9 billion ahead of its proposed IPO, with Ant Financial now valued at around $150 billion.