Shanghai established the Lujiazui Blockchain Financial Development Alliance and identified four experimental directions

Shanghai is leveraging its resource advantages in industry, government, capital and other aspects to seize the high ground in blockchain finance.

On October 9, under the guidance of the Shanghai Regulatory Bureau of the China Banking Regulatory Commission, the Shanghai Economic and Information Commission, and the Shanghai Lujiazui Financial City Development Bureau, 13 institutions including the Shanghai Internet Finance Industry Association, the Shanghai Financial Industry Federation, and the China Financial Information Center jointly initiated the establishment of the "Lujiazui Blockchain Financial Development Alliance". Relying on the central position of Shanghai Lujiazui in the financial industry, the alliance will focus on the application and extension of blockchain technology in financial services such as banking, securities, insurance, and Internet finance.

The 13 institutions are: Shanghai Internet Finance Industry Association, Shanghai Financial Industry Federation, Shanghai Payment and Clearing Association, Shanghai Listed Companies Association, Shanghai Information Security Industry Association, China Association of Small and Medium Enterprises, Shanghai Lixin University of Accounting and Finance, Shanghai Development Research Foundation, China Financial Information Center, Haitong Securities, China Zheshang Bank Shanghai Branch, Huarui Bank, and Zhongren Technology Group.

There are already many blockchain alliances. Since this year, several influential blockchain alliances have been established. On February 3, 2016, Beijing established the Zhongguancun Blockchain Industry Alliance, which focuses on cyberspace infrastructure innovation; on April 19, 11 institutions, mainly from multiple trading centers, established the China Ledger Alliance; on May 31, the Financial Blockchain Alliance was established in Shenzhen, with 25 initiators covering industries such as securities, funds, banks, insurance, and technology companies.

The biggest difference of the Lujiazui Blockchain Financial Development Alliance is that it has the participation of many industry associations in the financial industry, and it is widely representative. For example, the Shanghai Financial Industry Federation has 1,036 member units, covering almost all mainstream financial institutions in Shanghai.

"These industry organizations are all application scenarios of blockchain. The participation of so many financial institutions in blockchain is a huge opportunity for us. For example, payment and clearing are the application scenarios we most desire. If they can get involved, it will be of great help." Chu Xia Hu, a blockchain entrepreneur from Weiyou Metaverse, told The Paper.

As the main promoter of the alliance, Liu Gongrun, assistant general manager of the China Financial Information Center, told The Paper, "Many people compare the current blockchain craze with the previous Internet finance craze. The previously popular Internet finance industry once experienced wild growth, which also makes people more cautious about the blockchain finance craze. The establishment of this alliance, with the presence of many leaders from the Shanghai Municipal Government and financial regulatory agencies, shows that this alliance has been recognized and supported by the government."

What plans does the Shanghai Municipal Government have for developing the blockchain industry?

Wu Daqi, a consultant to the Shanghai Municipal People's Government and deputy director of the Standing Committee of the Pudong New Area People's Congress, once wrote an internal report to the Shanghai Municipal Government on the development of blockchain, which was approved by the city leaders. According to him, the four blockchain application pilot directions determined by the Shanghai Municipal Government are: 1. The application design of blockchain technology in the construction of the RMB cross-border payment system; 2. The application design of blockchain technology in the reform of the stock issuance registration system; 3. The application design of blockchain technology in improving the comprehensive local financial supervision system in Shanghai; 4. The application design of blockchain technology in supporting the development of the real economy and small and medium-sized enterprises.

Why are so many financial industries keen to participate in blockchain business?

The Shanghai branch of China Zheshang Bank is one of the initiators. Its president Gu Qingliang told The Paper that commercial banks now have more or less business development bottlenecks and difficulty in increasing small and micro loans. On the one hand, it is difficult to obtain loans, and on the other hand, it is difficult to raise funds. The use of blockchain technology and its business model will help commercial banks solve the relevant problems of small and micro finance, improve information symmetry and security, reduce operating costs and credit risks, and thus improve customer acquisition and profit models. Blockchain financial technology will also help Shanghai create a good financial ecosystem and solve the problem of financing difficulties for small and medium-sized enterprises.

According to Qin Yi, founder of Deloitte China Blockchain, the main investors in the blockchain industry are not venture capital institutions, but traditional financial institutions that have always been cautious. A report released by the World Economic Forum in August showed that in the past three years, the blockchain industry has received $1.4 billion in investment, but unlike before, more than half of the investment came from traditional industries, not venture capital.