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China Construction Bank pulls US$3 billion blockchain debt programme amid scrutiny on fintech, financial risks

  • Chinese lender has notified the Labuan regulator about its decision to stop the digital bond programme, Fusang Exchange says
  • Decision came on the verge of financial breakthrough just as regulators started tightening oversight of fintech risks

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People walk in front of the China Construction Bank branch in Shanghai in August 2020. The lender has decided not to proceed with a digital bond issue on blockchain without an explanation. Photo: EPA-EFE
China Construction Bank (CCB) has decided to pull a US$3 billion digital bond programme on a blockchain platform, getting cold feet on the eve of a market breakthrough, amid a clampdown on technology companies and their financial innovations.
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The bank, the world’s second-largest lender, “decided not to proceed” with the programme without offering an explanation, Fusang Exchange, a virtual stock exchange for digital initial offerings, said in a statement on Monday.

The Chinese lender’s proposed digital bonds were halted from trading just before they were to go live at noon on November 13 on Fusang’s virtual exchange, which is licensed by the Malaysian offshore financial authority in Labuan. About US$58 million worth of certificates of deposit were said to be issued in the first tranche.

CCB’s branch in Labuan was the lead arranger and listing sponsor of the digital security to be issued by a special purpose vehicle known as Longbond. The security would have matured in February 2021 and would have paid investors an annualised rate of 0.7 per cent, or Libor plus 50 basis points, higher than returns on the fixed deposit rate, according to a November 11 statement.

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China calls for more research and investment into blockchain technology

China calls for more research and investment into blockchain technology

“The exchange has accepted this decision, and is announcing the suspension of the listing with immediate effect,” Fusang said in the statement on Monday. “The exchange shall ensure an orderly withdrawal of all related listing processes and procedures, and has initiated the return of all investors’ funds.”

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The withdrawal mirrors the troubles with Ant Group, when its record-breaking IPO was halted 48 hours before the stock’s November 5 debut due to a “significant change” in its business environment. Ant has since refunded US$3 trillion to retail investors who applied for its shares in Shanghai and Hong Kong.
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