China has introduced a blockchain-based platform for warehouse receipts aimed at enhancing the process for non-ferrous metals in Shanghai. This initiative, known as the Cangdeng Chain, is designed to combat issues such as forged documents and unclear ownership in the commodity financing sector.
Features of the Cangdeng Chain
The Cangdeng Chain, developed by the National Commodity Warehouse Receipt Registration Center (NCWR) with assistance from several key entities, allows warehouse receipts to be recorded entirely on-chain. This approach eliminates the need for separate document uploads, streamlining the verification process. The first transactions included nickel and copper from Zhongxin Global Trading and Shanghai Wurui Metal Group, respectively.
The platform operates on a shared ledger that tracks the issuance, registration, and cancellation of receipts. This system employs smart contracts to automate various registration and verification tasks, enabling authorized participants, including warehouses and banks, to access a unified transaction history.
Impact on Commodity Financing
Since its inception in 2022, the NCWR has registered over 277,000 tonnes of commodities by May 2026, with registered receipts valued at 140 million yuan. The digital registration capabilities have expanded into financing options, as evidenced by a pilot program with China Zheshang Bank that pledged 993 tonnes of commodities worth over 100 million yuan. Earlier initiatives also secured significant funding through fully online loans.
The successful implementation of this blockchain system is seen as a crucial step in mitigating risks identified by Shanghai authorities, which include false documentation and the potential for duplicate financing. Revised regulations in Pudong have facilitated this transition, emphasizing the need for digital documents to remain identifiable and tamper-resistant.
Although the platform enhances the transparency and reliability of warehouse receipts, it is important to note that the ledger does not confirm the physical presence of non-ferrous metals within warehouses.
This material is for informational purposes only and does not constitute financial advice.
