The Application, Challenges and Legal Supervision of Blockchain in Cross Border Payment in China

Abstract

Exorbitant costs and extensive lead times are key concerns for transboundary payments. Transboundary deals face greater development challenges than domestic payment systems since they require a high degree of trust and include currency conversion. In this context, blockchain can successfully establish new cross-border payment services and promote cross-border commerce by employing a distributed public ledger that integrates public key encryption and peer-to-peer technology. Blockchain has got two key characteristics: distributed consensus and anonymity. By eliminating intermediaries between third-party finance agencies, it not only allows for instant payments around the clock but also contributes to mitigating the exposure to transboundary capital flows and meeting consumer needs for expedient transboundary payments and clearing services. This paper argues that while blockchain technology eliminates problems and presents effective strategies for conventional transboundary payments, it also raises many legislative and regulative issues for China. As the law itself is not yet mature, especially given the changes in international payments in the wake of the epidemic, it is worthwhile to explore the operating rationale and regulation obstacles of blockchain to the maximization of profits and minimization of risks in transborder payments by leveraging its inimitable strengths.