Fintech company Paxos has partnered with the Euroclear team to bring blockchain-based gold settlement to the London Bullion Market. The project, called Euroclear Bankchain, aims to leverage blockchain technology to make post-trade settlement more efficient.
London Bullion Market Will Get Its First Concrete Blockchain Use Case For Gold Settlement
Paxos and Euroclear executives announced the collaboration during this week’s SIBOS annual conference in Geneva, Switzerland. Paxos CEO Charles Cascarilla told attendees the partnership will produce the “first concrete blockchain use case for gold settlement in the London Bullion Market.”
The blockchain-based gold solution will benefit investors and key stakeholders during the Bankchain initial offering, Cascarilla told reporters.
We are coming to market with a ground-breaking offering that will drastically impact the post-trade process and overall trading infrastructure within the global gold market.
Founders Richmond Teo and Charles Cascarilla consider the flagship product Bankchain to be a next-generation blockchain settlement platform. The platform provides prompt settlement and automation to bring more fluid efficiency to post-trade capital markets, Cascarilla added.
Capital Injections & Reputable Post-Trade Partner
The company has raised a total of $28.25 million USD through two funding rounds. Last year, with investors such as the Digital Currency Group and Blockchain Capital, the company acquired $25 million in one Series A funding round. Cascarilla and partners first launched Bankchain under the cryptocurrency exchange itBit’s umbrella.
Euroclear claims it has a reputation as a trusted post-trade services provider — with a double-A rating from Standard & Poor’s.
The company works to provide settlement and safekeeping for securities, equities, bonds, and derivatives to investment funds. It also believes blockchain technology can transform the post-trade markets.
How Settlements Work Now
Currently, post-trade settlements often take days and come with significant costs from third parties, auditors, and paperwork. Euroclear says that with a distributed ledger mechanism, clearing can be done faster, more formally, and with cost savings. The Bankchain protocol, it says, can advance settlement times by providing a more frictionless environment.
“As a neutral market infrastructure, with a track record of providing high quality, reliable post-trade services to some of the world’s leading financial institutions, we are adopting a collaborative approach wherever possible, working with third-party innovators in ways that reward their innovation while simultaneously giving us flexibility,” said Luc Vantomme, Euroclear’s managing director and Global Head of Innovation.
“The settlement of unallocated gold is a very capital-intensive process. We are working to develop a service to reduce risk and balance sheet constraints.”
Bankchain’s Distributed Ledger Reduces Time and Risk
Both firms believe Bankchain can produce better results than the traditional London Bullion Market system. Cascarilla said that overall, the platform will reduce counterparty risk, and offer real-time tracking and transparent auditability.
The advent of blockchain settlement platforms, he said, will streamline the post-trade process. To prove its worth, his company is starting with the London Bullion and precious metals markets.
What do you think about Pax and Euroclear’s blockchain-based gold settlement Bankchain? Let us know in the comments below.
Images via Shutterstock, Pixabay.
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