Commonwealth Bank and Wells Fargo have announced they are testing blockchain for use in trade finance, focusing on the global cotton market.
Working alongside blockchain startup Skuchain and Australian cotton trading firm Brighann Cotton, the two banks facilitated a transaction between a cotton buyer and seller. In statements, Commonwealth said that the test enabled all parties involved "to track a shipment in real time" using a distributed ledger.
Michael Eidel, executive general manager for Commonwealth Cash-flow and Transaction Services office, said in a statement:
In the past year, a number of banks, companies and startups have focused squarely on applications for trade finance. The idea is that a distributed database like a blockchain can form the basis for a wholly digitized supply chain, using the tech's design to ward off potential fraud – something that banks like Wells Fargo and Commonwealth say they'll keep exploring for potential commercial uses.
"This marks another step in evaluating technology that, over time, could support the evolution of trade finance," said Chris Lewis, Wells Fargo's head of of International Trade Services.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Skuchain.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.