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On Tuesday, Hong Kong’s banking regulator and a cohort of seven banks including HSBC Holdings PLC and Standard Charter PLC announced the launch of their trade finance platform in September using blockchain technology.

Distributed ledger technology has been steadily knocking at the door of the financial services industry, and Hong Kong is by no means the first to answer. Nonetheless, the scope of this project and the government-led, cross-bank engine powering it, attests to the promising future in trade finance blockchain proselytizers anticipate for the technology.

The Paper Problem

This new project is addressing a long-standing problem in the trade finance sector; the excess of manual, paper-oriented tasks. Howard Lee, deputy chief executive of Hong Kong Monetary Authority (HKMA), says the blockchain platform will serve to digitize documents, automate processes, reduce risks, and increase the financing capability of the industry.

Expected Reception

In light of the Asia Development Bank’s 2017 survey indicating 40 percent of the worlds $1.5 trillion in unmet demand for trade finance originates in the Asia-Pacific region, market participants are hoping blockchain will enable them to expand and better serve their client base.

Beyond the launch, Lee suspects “the next major milestone” will be linking up “trade platforms in other jurisdiction to further facilitate cross-border trades.” If Lee’s road-map holds true, this launch may be the beginning of a blockchain-based solution to the global finance trade gap.

Will Crypto Benefit?

Some think the embrace of blockchain technology will indirectly benefit the cryptocurrency ecosystem, if not through regulation, at least in its overall perception by established markets. At present, all we can do is speculate and await the accumulation of more data. However, as this and similar blockchain projects launch; clarity about how digital assets stand to benefit will follow.