Trade financing will be courtesy of Mastercard outside of China, and Alipay Australia for goods headed to China. Products can be tracked using VeChain as the public blockchain or Mastercard Provenance as the permissioned ledger.
VeChain, Mastercard and Alipay are among the heavy hitters backing the new APAC Provenance Council, which has already secured millions in funding for supply chain tracking and financing pilots throughout the Asia Pacific region.
The consortium will provide comprehensive solutions for authenticating and tracking food, wine and produce using blockchain, with a particular focus on the $76 billion of exports from Australia to China.
Supply chain tracking was a key use case identified in the Australian Government’s recent National Blockchain Roadmap and Australia’s share in the value of exports to China reached a record 38% in 2019 – more than any other country.
Faster payments at various stages
With the economic lockdown badly affecting company cash flows, a unique selling point will be to enable “milestone” payments to various parties as shipments move along the supply chain.
For example 30% can be automatically paid when the blockchain records a shipment clearing customs in Australia, another 30% when it hits customs in China and the remainder on delivery. Instant payments can be made using credit to a digital wallet, rather than waiting for accounts to settle a month later.
David Inderias, the co-founder and CEO of Fresh Supply Co. – a core vendor behind the Provenance Council – said Mastercard and Alipay enabled the consortium to offer instant payments.
“We offer the ability to finance and facilitate payments instantly,” he said. “We can get our clients paid faster, so that means paying by credit. Typically terms of trade is receipt plus 30 days, so it’s exciting to a lot of our clients who can get paid instantly.”
“So what we’re saying is we’re taking B2B, extremely large invoices and fronting them short term credit for 30 days. So you can hold on to your cash so you have more working capital.
If I’m a purchaser like Alibaba, I don’t have to use real money, I can use credit, so long as I settle in 30 days. And the benefit of that is the producer gets paid quickly.”
CEO of VeChain Sunny Lu said this new ecosystem would be enormously beneficial. “The implementation of blockchain technology certainly contributes to buffering the immediate economic impacts of the pandemic for enterprises, and will help improve productivity by unleashing more resources and growth opportunities,” he said.
Apart from blockchain and finance companies, the consortium also includes food industry bodies, standards agencies, packaging and labelling service providers.
Blockchain verified “paddock to plate”
The core commercial vendors behind the Provenance Council are all Australian: supply chain integrations and middleware company Fresh Supply Co., CSIRO-backed digital fingerprinting company Laava and provenance authentication outfit Source Certain International.
Inderias said FSC already offers blockchain-verified trade financing of $80,000 a week in partnership with Mastercard for a major Australian dairy exporter and is in the process of integrating one of the country’s largest seafood exporters which accounts for hundreds of millions of exports annually.
The CEO of Blockchain Australia, Nicholas Giurietto, voiced his support for the council, stating:
“The National Blockchain Roadmap identified agricultural supply chains as a key area where blockchain and adjacent technologies can transform our national capability. The formation of the APAC Provenance Council is a great step forward that will allow us to move forward with projects that will enhance the transparency, efficiency and management of agricultural and other supply chains.”
Traders Buy Oil Futures With Crypto Amid Record Volatility
The Binance-owned crypto derivatives exchange, FTX, has introduced oil futures following the recent record crash in U.S. oil prices – which fell as low as minus-$40 on April 20.
FTX’s contracts will expire at the spot price of West Texas Intermediate, or WTI, plus $100 to protect against negative settlement prices.
The exchange notes that should the spot price of oil fall below minus-$100, “FTX OIL contracts “can theoretically expire negative.”
FTX launches crypto-based oil contract trading
FTX comprises a top-10 ranked Bitcoin futures exchange by both volume and open interest. The Binance-owned exchange is the largest to offer crypto-based oil contract trading.
The contracts are not available to account-holders residing in or with an IP address in the United States, Canada, or a number of other verboten locations.
Oil’s volatility dwarfs cryptocurrencies
Despite being known for their volatility, cryptocurrencies have paled in comparison to the price swings posted by WTI since March.
The contracts will trade until settlement, even if they are settled after the expiration date has expired.
Derivative volumes spike in 2020
The first quarter of 2020 saw record trade volume posted by the crypto derivatives sector, driven by new market entrants, Binance and FTX.
A report published by CryptoCompare earlier this month estimated that the combined market share of Binance and FTX grew from 14% in January to 22% in March amid the dramatic crypto market crash.
Binance saw the largest volume among derivatives exchanges, with $2.8 billion in futures contracts changing hands during the violent sell-off.