Chinese banks have drastically increased the number of blockchain-related patents filed in the past four years, according to data compiled by Shanghai-based internet finance research firm 01 Caijing, indicating growing attention to the technology in the country.
Why it matters: China has been trying to establish itself as a leader in the global tech race in recent years. Blockchain is an emerging technology that has been gaining momentum.
- Banking institutions in China have been encouraged to assess applications for the technology in trade finance, payments, digital assets, among others. People’s Bank of China, the country’s central bank, ramped up the development of its planned digital currency in the second half of 2019. Chinese state-owned banks are involved in carrying out tests for the payment system, TechNode has reported.
- Momentum in China’s sector accelerated after President Xi Jinping’s remarks in October on the importance of its development.
- Rather than traditional banks, tech companies like Alibaba, Ping An Insurance, and JD Digits have been leading the charge in blockchain research for fintech.
Details: The number of blockchain patent filings by Chinese banks increased to 433 patents in 2019, a 38-fold jump from 11 patents filed in 2016.
- From 2016 to 2019, Tencent’s digital banking arm WeBank filed 288 patents involving the technology—topping Chinese banking peers. Industrial and Commercial Bank of China (ICBC) filed 50 patents using the technology during the same time frame and Bank of China ranked third with 40 patents filed.
- A total of 15 banks applied for blockchain-related patents over the four-year period.
- In 2019, nine banks applied for 284 blockchain-related patents. WeBank alone filed for 229 patents, accounting for 81% of all patents filed during the year.
- However, applications do not automatically translate into commercial success. Some 93% of blockchain patents filed by Chinese companies remain in pending status, and a majority of those approved are not licensed for commercial use, according to a report by analytics firm Block Data published in November.
Alibaba, Ping An’s OneConnect top blockchain patent rankings: report
Context: There were a number of notable developments in China’s blockchain industry in 2019.
- In the third quarter of 2019, a staggering 70,000 companies entered the blockchain space—a 265% increase from the previous quarter, TechNode reported. More than half of the projects were financial services applications.
- The ban on cryptocurrency exchange services and initial coin offering (ICO) continued in China.