Singapore based Incomland, set up in 2016, have created a company called LC LITE using Blockchain technology to tackle the inefficiencies prevalent in the LC market.It is claimed that up to 80% of LC documents have discrepancies and the administration of documentation can cost up to twenty percent of the actual cost of shipping goods. LC LITE are looking to use Smart Contracts so that importers and exporters will be able to agree on terms up front and so replace the current LC agreements manual processes. It is hoped that this will simplify and quicken the inefficient processing of documentation while reducing the number of intermediaries, this improves cash flow for importers and exporters while improving security and reducing fraud.
One of the challenges of using Smart Contracts is that many lawyers believe that they are neither Smart nor are they Contracts, all they are in effect a software program and therefore not backed by law.
However, different jurisdictions are reviewing Smart Contracts, this so this stance may change. Luxemburg has recently passed a law to enable the use of Blockchain technology in financial services which is claimed to mean that transactions created digitally using a Blockchain will have the same legal status and protection as those done through traditional means.
This new law in Luxemburg could encourage Blockchain savvy businesses to move to Luxemburg and help it strengthen its position as one of Europe’s largest administrator for the European asset management sector.
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