The usage of Blockhain for securitization has expanded in China faster than any other country in the world, according to Fitch Ratings.
For the foreseeable future, securitization is likely to use blockchain for certain aspects of a transaction, as opposed to full or end to end blockchain, as the technology, laws and regulations develop says Fitch.
In the report Fitch note some impressive developments:
There are at least eight ABS transactions which reported using blockchain technology for part of the securitization process. These transactions are not rated by Fitch and all but one of the eight transactions was privately placed. The exception is Jiaoying 2018-1, a CNY9.3 billion residential mortgage-backed security transaction issued by The Bank of Communications, one of the largest state-owned banks, using a proprietary blockchain Jucai Chain
They go on to say that the government's recent support of the Blockchain industry will likely mean that the rapid pace of expansion is set to continue across the financial spectrum. There are some key positives for the use of Blockchain in finance, one being, the technology gives the potential to promote data transparency and transactional efficiency. There are still some issues that need to be addressed such as data ownership, transfer of the asset/title, and security enforceability will need to be addressed before the technology becomes more widespread.
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