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

JD Finance, a subsidiary of Chinese e-commerce giant JD.com, announced on Wednesday that it is planning to issue asset-backed securities (ABSs) on a blockchain.

According to a report from the Securities Times, an outlet of the China Securities Regulatory Commission, JD Finance established the trial in partnership with Huatai Securities, a brokerage firm that will underwrite the issuance, as well as Xingye Bank, which will act as a trust.

JD Finance aims to issue the securities using a consortium blockchain that will see each party act as a node, recording the transactions in a transparent manner. The experiment sets out to ascertain if the blockchain can meet the demands of the various parties involved in the asset securitization process, such as issuers, underwriters and buyers.

The financial services firm first rolled out its traditional, non-blockchain ABS product in 2015, as well as an online service that helps other companies to raise capital through their issuance. This typically comes in the form of a portfolio of loans or credit card debts that can be further traded on the secondary market.

According to a local news source, the firm issued an automobile loan in August 2017 using a blockchain platform, marking the firm's initial trial in incorporating distributed ledger technology to its financial services.

JD.com also announced in April that it will launch a proprietary blockchain-as-a-service platform this year, in line with other tech giants including Huawei, Oracle, IBM and Microsoft.

JD.com image via Shutterstock