SBI Holdings and TradeFinex will promote the adoption of the Ethereum Virtual Machine-compatible enterprise blockchain XDC Network for trade finance through the establishment of a new joint venture in Japan.
TradeFinex, a company based in the United Arab Emirates, operates its own decentralized platform on the XDC network for trade finance originators to connect to various banks and lending institutions. Targeting enterprise use cases, TradeFinex mainly provides blockchain-based trade finance products, including invoices, letters of credit, purchase order finance and supply chain finance.
The XDC Network is a layer-1 network compatible with EVM, with interoperable smart contracts. Its documentation describes the protocol as a “highly optimized custom fork” of Ethereum that uses a delegated proof-of-stake (DPoS) mechanism to achieve fast transaction times, low gas fees and high transaction capacity per second.
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XDC operates using its native XDC token, which serves as the reserve cryptocurrency for third-party decentralized applications (DApps) running on the network. The token is designed to be used for multiple use cases, including DApp payment settlement, micropayments, transaction costs, and smart contract deployment and settlement.
TradeFinex has been involved in working with the World Trade Organization, the International Chamber of Commerce and various government agencies to explore blockchain as a means to revolutionize the speed, transparency, cost and traceability of trade finance.
World Trade Organization Report 2020 highlight TradeFinex operates as a “network that operates in both a permissioned and permissionless manner: public verification without permissions, but allowing selective data sharing.”
As of the publication of this article, several players are using TradeFinex, including Validus, Enigio, Ramco, and the International Trade and Forfaiting Association, among others.
An announcement shared with Cointelegraph outlines the joint venture’s goals to localize XDC network information and documentation in Japan, promote the XDC token to local cryptocurrency exchanges, and deploy trade finance solutions across the Asia-Pacific region.
The joint venture follows recent reports in Japan that the Japanese government intends to allow startups to raise funds through the issuance of cryptocurrency tokens rather than traditional stock listings.
The Japan Financial Services Agency also announced plans to amend cryptocurrency-related tax laws in August 2023 to play a more active role in cryptocurrency regulation. This could include exempting cryptocurrencies from “unrealized gains” taxes.
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