XDC Network, a hybrid blockchain built for global trade and finance, has integrated with the Infocomm Media Development Authority’s (IMDA) TradeTrust, and launched an initiative to enable the creation and financing of Model Law on Electronic Trade Records (MLETR)-compliant digital trade documents.
The new initiative, XDC Trade Network, is being headed up by Sunil Senapati, who joined XDC as chief operating officer for trade and payments in September last year. Set up as a special purpose entity, XDC Trade Network is a suite of decentralised applications built on the XDC platform that enables users to issue digitally signed, verifiable trade documents, such as electronic bills of lading, according to the requirements set out in MLETR.
TradeTrust is a digital utility that connects governments and businesses to a public blockchain. It aims to simplify cross-border trade by enabling interoperability and traceability across different trade platforms and formats, harmonising the legal recognition of digital documents between various jurisdictions which have adopted MLETR.
With the integration of TradeTrust into the XDC platform, users will be able to trace the source of these documents, verify their authenticity, as well as effect title transfer across different digital platforms.
“Incorporating TradeTrust into XDC Network brings in the much-needed utility the industry has been waiting for,” says Senapati.
“IMDA is excited to partner with XDC Network to provide another blockchain-enabled platform that will enable government bodies and businesses to digitalise cross-border trade,” adds Loh Sin Yong, director of TradeTrust at the IMDA. “With the growing demands of blockchain globally, XDC Network as a partner of IMDA’s TradeTrust is one of the solutions for trade finance. We will continue to work closely with industry partners to push the envelope in global digital trade.”
The initiative comes amid growing global legal acceptance of electronic trade documents. Singapore adopted MLETR into its domestic legislation in 2021, and the first-ever cross-border digital trade financing pilot between two MLETR-compliant jurisdictions, carried out using the IMDA’s TradeTrust framework, came a few months later.
Last month, the UK’s Electronic Trade Documents Bill, which is based upon MLETR, gained Royal Assent, giving digital documents the same recognition as their paper counterparts under English law – which the International Chamber of Commerce estimates governs 80% of bills of lading.
“With MLETR gaining momentum, our solution should drive digitalisation across trade participants,” says Senapati. “This would lower compliance costs, ease access to capital for SMEs, allow monitoring of logistics chains in real-time, and even help prevent documentary fraud. With so many nations actively working to push through the enabling regulatory frameworks, we feel our solution is very timely and we can say cross-border trade is increasingly looking more digital.”
As well as enabling digital trade documents to be created and transferred via blockchain, the XDC Trade Network also aims to provide liquidity to finance them through tokenisation. The Singapore-based network has already demonstrated its potential in this regard, both by providing the rails for the world’s first trade finance-based non-fungible token (NFT) transaction in 2021, in partnership with trade finance distribution platform Tradeteq, and through the creation of trade finance-backed fungible security token, Trada.
“As [XDC Trade Network] brings in more visibility and verifiable trade documents, XDC is confident to bring in institutional investors, non-bank liquidity providers, and alternative credit funds to participate in the trade finance market,” the company says, adding that pilots are already underway and that a “fully functional” solution with a regulated custodian will go live in September.
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