How WaveBL is Transforming Trust in Electronic Trade Documents with the LEI and vLEI
Boaz Lessem, Chief of Legal Regulation and Partnerships at WaveBL, discusses how the LEI and vLEI are expected to enhance trust and security in the digital trade ecosystem.
Author: Boaz Lessem, Chief of Legal Regulation and Partnerships at WaveBL
Date: 2024-09-17
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The adoption of electronic Bills of Lading (eBLs) is accelerating rapidly, driven by international initiatives and legislative developments paving the way for the full digital transformation of global trade. The Model Law on Electronic Transferable Records (MLETR) is revolutionizing legal frameworks across numerous jurisdictions, creating an environment where electronic trade documents are becoming the norm. In line with these developments, the FIT Alliance, supported by GLEIF and WaveBL, established ambitious objectives to raise awareness and accelerate the adoption of standards-based electronic eBLs across all shipping industry sectors. As a founding member of this alliance, the Digital Container Shipping Association (DCSA) has set an ambitious goal of achieving 100% adoption of eBLs by 2030. In this context, WaveBL, a leading blockchain-based platform for digitizing electronic trade documents, is driving innovation by integrating the Legal Entity Identifier (LEI) and its digital counterpart, the verifiable LEI (vLEI), into its platform.
Why is the adoption of LEIs critical for electronic trade documents?
As global trade digitizes, ensuring the accurate and consistent identification of legal entities involved in transactions is paramount. As the only global standard for legal entity identification, the LEI plays a crucial role in this process. By enabling the designation of digital identities on the WaveBL network that are paired with LEIs into electronic Bills of Lading (eBLs) and electronic Bills of Exchange (eBoEs), WaveBL is enhancing both the reliability and transparency of trade documents. LEIs ensure that all parties involved in a transaction are accurately identified and verified, reducing the risk of errors, fraud, and legal disputes. This standardized identification also supports enhanced interoperability across different platforms and jurisdictions, making global trade more seamless and secure. These benefits have been recently highlighted in a case study published by the ICC’s Digital Standards Initiative and conducted by GLEIF, WaveBL, and TradeGo.
How do Platform Digital Identifiers (PDIs) differ from LEIs, and why are both important?
PDIs are unique digital "postboxes" provided by electronic trade platforms like WaveBL to represent their subscribed legal entities. These PDIs are designed to be unequivocally linked to the legal entity data set they represent, enabling those entities to perform actions related to electronic trade documents digitally. However, self-inserting the legal entity’s data set into PDIs alone may not provide the consistency and trust needed for global trade. By integrating LEIs with PDIs, we aim to ensure that digital identifiers are not only unique but also standardized and verified against a global standard. This combination of PDIs and LEIs can enhance the digital trade environment's accuracy, reliability, and security, enabling future automation.
What challenges exist with the current entity identification system in electronic trade?
Electronic trade documents’ current entity identification system needs greater consistency and reliability. Different platforms may use varying methods to identify and label legal entities, leading to potential discrepancies and legal disputes. Without a standardized approach, the risk of misidentification increases, which can compromise the integrity of the entire trade transaction. LEIs offer a solution by providing a universal standard that ensures all entities are consistently identified across different platforms, minimizing the risks associated with manual errors and differing methodologies. The integration of vLEIs is expected to further enhance this process by allowing automatic verification of digital identities and their authority to identify and label a PDI, thus reducing the burden of manual checks and improving overall efficiency.
How can the LEI contribute to cross-platform interoperability in digital trade?
Cross-platform interoperability is essential for the smooth functioning of global trade, especially as more transactions move to digital platforms. LEIs facilitate this by providing a common, standardized identity that can be used across multiple platforms. This not only enhances the reliability of the identification process but also simplifies the integration of different systems, allowing for more efficient and secure exchanges of electronic trade documents. By allowing integration of LEIs, platforms like WaveBL can ensure that all parties involved in a transaction are accurately identified and that the documents are trusted and recognized across different platforms and jurisdictions. This is particularly crucial as the industry moves towards the DCSA’s 2030 goal of full eBL adoption.
What role can the LEI play in reducing the risk of fraud and ensuring compliance in electronic trade?
One of the significant challenges in electronic trade is ensuring that all parties involved are legitimate and authorized to participate in the transaction. LEIs help mitigate this risk by providing a verified and standardized identifier that can be used to confirm the identity of each legal entity. This reduces the likelihood of fraud and unauthorized actions, as the LEI ensures that only verified entities can engage in trade activities. Additionally, LEIs support regulatory compliance by providing a reliable method for tracking and verifying the entities involved in a transaction, making it easier for platforms like WaveBL to meet legal and regulatory requirements. This benefit is further strengthened via the implementation of vLEIs, which allow the secure and automated verification of the authority labeling the established PDI, thus streamlining compliance processes and enhancing overall security.
What is the future impact of LEIs on the digitization of global trade?
As global trade progresses toward a paperless future, the importance of, and demand for, reliable and standardized identification methods like the LEI will only grow. The LEIs, and particularly the vLEI, will play a critical role in ensuring that digital trade platforms can operate securely and efficiently, enabling the seamless exchange of electronic trade documents across borders and jurisdictions. By adopting the LEI, the trade industry can significantly enhance the trust and reliability of digital transactions, paving the way for greater adoption of electronic trade documents and a more interconnected global trade ecosystem. WaveBL’s integration of LEIs and vLEIs represents a significant advancement toward this future, setting the stage for global interoperability and a fully digitized trade environment by 2030.
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Boaz Lessem, Adv., Is the Chief of Legal Regulations and Partnerships at WaveBL, a blockchain-based electronic Bill of Lading (eBL) platform. A globally recognized expert in regulatory and legal matters, specializing in the digitization of electronic trade documents, particularly electronic Bills of Lading (eBL) and electronic bills of exchange (eBoE). Boaz played a key role in creating WaveBL’s legal framework and led the platform through its initial approval by the International Group of P&I Clubs (IGP&I) in December 2019. Under his guidance, WaveBL is now widely used by leading carriers, facilitating the issuance of electronic Bills of Lading to customers worldwide. Boaz actively participates in industry groups advocating for standardization, interoperability, law reforms, and a deeper understanding of the impact of global trade digitization on the supply chain and the financial sector.
