Introduction to the Partnership
SWIAT, a blockchain software developer based in Frankfurt, has recently formed a strategic partnership with Olea, a digital financial market infrastructure firm located in Singapore. This collaboration is poised to innovate the trade finance sector and streamline the financing process through blockchain technology.
Tokenization of Receivables
In preparation for financing, Olea has implemented a process for tokenizing receivables that arise from suppliers delivering goods. This innovative approach allows for greater efficiency and compliance with regulatory standards, such as the anticipated Basel III regulations. Utilizing SWIAT’s robust blockchain infrastructure, Olea successfully matched these tokenized receivables with appropriate funders, laying the groundwork for a more effective financial ecosystem.
DekaBank: A Key Player
DekaBank, a joint-venture partner of SWIAT, played a pivotal role as the inaugural funder for the tokenized receivables featured in this initiative. The partnership capitalized on SWIAT’s advanced tokenization engine combined with Olea’s extensive expertise in trade receivables financing, creating a synergistic effect that enhances the overall funding process.
Exploring the Trade Finance Market
The global trade finance market was valued at an impressive $9.3 trillion in 2022, with projections indicating that it could grow to $12.5 trillion by 2032, reflecting a compound annual growth rate (CAGR) of 3%. This growth presents vast opportunities for blockchain applications within trade finance, where traditional methods often involve inefficiencies such as slow processing times, complex documentation, and high costs.
Enhancing Supply Chain Finance
Supply chain finance solutions are vital for optimizing working capital, enabling companies to extend payment terms to suppliers while ensuring timely payments. This form of financing is regarded as secure due to its reliance on predictable collateral and well-documented operational flows. By introducing blockchain technology, SWIAT and Olea aim to redefine trade finance, addressing common challenges and fostering a more transparent and efficient ecosystem for businesses around the globe.
Backed by SC Ventures
The collaboration between SWIAT and Olea is further strengthened by backing from SC Ventures, the innovation arm of Standard Chartered. This support facilitates both companies’ expansion efforts in Singapore and Germany, enhancing their operational capabilities and market reach.
Digital Assets and Tokenization Trends
SWIAT envisions a future where digital assets become increasingly vital as the trend of asset tokenization grows. The company forecasts substantial growth in the European decentralized financial market, with expectations of exceeding 60% annually, potentially reaching over €3 trillion (approximately $3.34 trillion) by 2030.
Recent Developments in Blockchain-Powered Securities
SWIAT’s private blockchain has already facilitated several digital bond issuances in recent months. Notably, on September 13, Siemens issued €100,000 worth of crypto securities (around $111.3k) under Germany’s Electronic Securities Act (eWpG), which were redeemed merely three days later. The entire transaction, conducted through a swift process that included asset transfers on SWIAT’s delivery-versus-payment (DvP) mechanism, was completed in just 93 seconds, showcasing the efficiency of blockchain in financial transactions.
Significant Issuance of Digital Bonds
In another remarkable development, Siemens issued a €300 million digital bond (approximately $334 million) on the SWIAT blockchain earlier this month. This issuance was settled using traditional central bank money through Germany’s Trigger solution, streamlining central bank payments via the TARGET 2 system. This significant transaction was part of the European Central Bank’s (ECB) ongoing trials of wholesale distributed ledger technology (DLT) settlement, further highlighting the growing integration of blockchain in the financial sector.