Skuchain has executed the first Distributed Ledger Payment Commitment (DLPC) transactions over its digital blockchain platform for global trade.

The California-based fintech says the DLPC, which was developed and is backed by the Bankers Association for Finance and Trade (BAFT), in these transactions provided similar security as a letter of credit (L/C) in an open account trade.

Deal structure

The transactions executed over the Skuchain platform involved metal commodities worth around US$43 million purchased by Mitsubishi Americas from one of the largest mines in Peru.

The purchases were made over multiple transactions using Skuchain's currency agnostic blockchain for digital trade assets that were used for payment through Mizuho Bank.

BAFT framework

The DLPC issued by the buyer is a digital negotiable instrument with an industry-wide legal framework devised by BAFT.

The association has also developed best practices for the DLPC, which can be used and can operate across networks.

Comparison with L/Cs

In the Mitsubishi transactions, Skuchain says its blockchain managed the lifecycle of the digital asset from issuance to discharge and triggered secure payment instructions to Mizuho.

The fintech says this "makes open account trade transactions frictionless and with a similar level of security as L/Cs, guarantees and other traditional trade instruments, at a reduced cost."

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.