Why the Electronic Trade Documents Bill is a Game Changer for Trade Finance Blockchains

Earlier this week, the Electronic Trade Documents Bill (ETDB) was passed into law by the UK Parliament and is now officially the Electronic Trade Documents Act.

This new Act means that businesses can now exchange trade documents (e.g. bills of lading, waybills, and insurance certificates) electronically.

Trade Finance is an antiquated business, and until now has been heavily reliant on paper-based and outdated processes. In fact, as we pointed out in our recent article about XDC Network, the processes involved haven’t really changed that much since the 19th Century.

Electronic Trade Documents Bill and Blockchain Technology

While no particular technology is singled out in the Act, this legislative change will have major implications for the adoption of blockchain technology in the trade finance space.

The Act states that an electronic document should be subject to exclusive ownership once transferred electronically and that the previous holder should no longer be able to assert ownership or exercise any control over the document. This sets the scene for the adoption of blockchain in trade finance – which would technologically facilitate this.

Blockchain has the potential to make the trade finance industry more efficient by addressing many of its current issues, including replacing the opaque, complex web of transactions with a transparent and immutable record.

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Blockchain also has the potential to disintermediate supply chains and significantly reduce the number of checks (customs etc.) that an international shipment has to undergo.

Transfer of title will also be reduced from several days to just minutes.

This is big news for blockchains focused on facilitating trade finance. To learn more about a blockchain that aims to revolutionize trade finance, read our recent article about XDC Network.