SBI Holdings and TradeFinex are teaming up to promote the adoption of the Ethereum Virtual Machine-compatible enterprise blockchain known as the XDC Network for trade finance in Japan. This collaboration will establish a new joint venture.
TradeFinex, a company based in the United Arab Emirates, operates a decentralized platform on the XDC network, connecting trade finance originators with various banks and lending institutions. It primarily offers blockchain-based trade finance solutions, including services like invoices, letters of credit, purchase order finance, and supply chain finance, targeting enterprise applications.
The XDC Network is a layer-1 network compatible with the Ethereum Virtual Machine (EVM) and features interoperable smart contracts. It is described as a "highly optimized custom fork" of Ethereum that employs a delegated proof-of-stake (DPoS) mechanism to achieve fast transaction processing, low gas fees, and a high transaction throughput. The XDC network utilizes its native XDC token, which serves as the reserve cryptocurrency for third-party decentralized applications (DApps) running on the network. This token has multiple use cases, including settling payments in DApps, facilitating micropayments, covering transaction costs, and deploying and settling smart contracts.
TradeFinex has been actively involved in collaborations with institutions like the World Trade Organization (WTO), the International Chamber of Commerce (ICC), and various government agencies to explore blockchain's potential to enhance the speed, transparency, cost-effectiveness, and traceability of trade finance.
A 2020 WTO report highlighted TradeFinex as a network that operates in both permissioned and permissionless modes, allowing selective data sharing without requiring public verification.
Currently, TradeFinex is being used by several key players, including Validus, Enigio, Ramco, and the International Trade and Forfaiting Association, among others. The joint venture's objectives, as outlined in an announcement, include localizing XDC network information and documentation in Japan, promoting the XDC token on local cryptocurrency exchanges, and deploying 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.
Japan’s Financial Services Agency also announced plans to amend cryptocurrency-related tax laws in August 2023 to take a more active role in cryptocurrency regulation. This could include exempting cryptocurrencies from “unrealized gains” taxes.
