Today, Japan’s MUFG Bank announced it completed its first live blockchain transaction on the commodity trade finance platform, komgo. MUFG executed a letter of credit in London for commodity trader Mercuria.
Geneva-based KomGo SA was formed by MUFG and 14 other global institutions including banks, commodity traders, energy majors and a certification company.
The platform offers trade finance products such as letters of credit, standby letters of credit and receivables discounting. Additionally, it has a Know Your Customer (KYC) compliance solution, which standardizes the KYC process without using a central database.
By leveraging blockchain, komgo enables faster trade finance operations as manual processes are reduced. Meanwhile, the immutable nature of blockchain ensures data privacy and security, eliminating fraudulent transactions.
At the SIBOS conference last September it was revealed that transaction volumes had passed the $700 million mark with at least six banks and two corporates executing live trades on the platform. To date, the other banks that have announced transactions are Société Générale, ING, Natixis, Rabobank and now MUFG.
“We believe KomGo SA’s fully digitalized open financing platform, powered by blockchain technology, will dramatically improve the efficiency and transparency of the industry,” said Jean-Marie Le Fouest, Managing Director, Head of Commodity and Structured Trade Finance EMEA at MUFG.
Fouest added, “MUFG is proud to be a pioneer in the digitalization of the commodity trade finance sector, and we look forward to continuing our support of komgo’s development around the world.”
komgo is based on JP Morgan’s Quorum blockchain, the enterprise version of Ethereum, and aims to digitize trade finance operation to improve efficiency. ConSensys’ Kaleido helped with developing the hosting network.
The full list of the founders includes — MUFG Bank, ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, Natixis, Rabobank, Shell, SGS and Société Générale.
A few months ago, Lloyds Bank became the first UK bank to join komgo.
VAKT is another commodities blockchain consortium, which is focused on oil post-trade processes and is considered a sister company. That’s because many of komgo’s shareholders – ING, ABN AMRO, Koch, Mercuria, Shell and Société Générale – are also shareholders of UK-based VAKT.
MUFG is active in the blockchain space and also recently became a member of the Marco Polo trade finance network. Other high profile trade finance blockchains include we.trade, a network focused on SMEs, which recently announced that Spain’s CaixaBank joined the platform. Plus there’s the Letter of Credit blockchain (formerly Voltron).