SAFE (The State Administration of Foreign Exchange) will expedite the construction of a cross-border platform to extend blockchain services in finance this year. It will also encourage protection against state financial risks, according to a SAFE meeting on planning work for 2020.

The meeting also regarded the significance of protecting the financial system from outer risks, particularly those concerning cross-border transactions. The SAFE strives to maintain the security of China’s foreign exchange reserves, streamline administration, deepen reforms to delegate power and optimize government services.

The SAFE launched the cross-border blockchain platform for financial services in March 2019, and it has endured trials in 17 provinces and municipalities.

Cao Yin, an analyst in the blockchain sector, told the Global Times Sunday that it is expected to reduce financing obstacles for small and medium-sized enterprises (SMEs), and it can offer financing services with higher transaction security and efficiency.

“The difficulties for SMEs to obtain finance, especially when it involves cross-border trading, mainly lie in the verification of the companies’ creditworthiness,” Cao noted. “This forces the companies to provide documents for human verification, which is costly and time-consuming compared with the blockchain platform.”

The blockchain platform, by contradiction, produces a decentralized system that can trace the companies’ trading history, including past capital flows. It can also give a quick and objective assessment of the companies and provide secure financing services, respectively, according to Cao.

“It is foreseeable that the cross-border blockchain system will be a milestone in providing financing services in China,” Cao said.

Since November 20, the blockchain platform launched by the SAFE had assisted 1,590 companies. As of now, it is the only state blockchain platform enrolled with the Cyber Administration of China, according to the Economic Information Daily.