Global Blockchain-based Trade Finance Solutions: Analysis of Governance Models and Impact on Local Laws in Six Jurisdictions
Global Journal of Comparative Law, 11(2022) 167-196
University of Hong Kong Faculty of Law Research Paper No. 2023/18
25 Pages Posted: 3 Mar 2023
Date Written: 2022
Abstract
Most people generally link blockchain technology with the cryptocurrency phenomenon of the last decade. The application of this innovative new technology, however, is actually much broader. One of the most promising areas where blockchain has the potential to be revolutionary is trade finance. Despite the economic importance of trade finance as a core component of commercial trade, the fundamentals of trade finance have not dramatically changed for centuries. Most of the transactions continue to be largely paper-based and counterparties still face many of the same risks, obstacles and challenges they did when the Spanish empire ruled the seas. The use of blockchain can address many of these inefficiencies and reduce the friction encountered by small and medium enterprises using trade finance arrangements to access global markets. This article analyses the main advantages of using blockchain-based trade finance solutions and explores the associated legal developments in a cross section of six jurisdictions that have all taken (or are taking) different approaches. Those jurisdictions are the United States of America, United Kingdom, Australia, Singapore, Hong Kong and Qatar. The paper concludes that legal reforms have an important role in assisting the introduction of blockchain into trade finance. Moreover, such an introduction will greatly benefit the economic prospects of SMEs seeking to reach transnational markets.
Keywords: Blockchain, Trade Finance, Financial Regulation, Governance, Smart Contracts, Data Protection, Privacy, Comparative, Australia, Singapore, Hong Kong, Qatar
Suggested Citation: Suggested Citation