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Paxos, Euroclear develop blockchain settlement service for gold market
Paxos, a fintech company delivering blockchain solutions for the financial services industry, has announced that it is working with Euroclear, one of the world's largest settlement houses, on the development of a blockchain settlement service for the gold market, called Euroclear Bankchain.
In June, Euroclear and itBit, which recently rebranded to Paxos, announced their collaboration to explore opportunities in creating a next generation settlement service for the London gold market. Paxos’ flagship blockchain settlement platform, Bankchain, is a cloud-based platform-as-a-service (PaaS) solution transforming post-trade market infrastructures and back office processes for its global clients.
The announcement on Euroclear Bankchain was made during a signing ceremony event at the SIBOS Annual Conference in Geneva, Switzerland, where Paxos and Euroclear officials and market participants celebrated their collaboration announced earlier this year.
"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. This product represents the first concrete blockchain use case for gold settlement in the London Bullion Market and is poised to benefit all investors and key stakeholders through our revolutionary Bankchain offering. We are pleased to commemorate our progress at today's signing, at this important industry gathering," said Paxos CEO Charles Cascarilla.
According to the website, Euroclear Bankchain combines Euroclear’s strengths as a leading domestic and cross border settlement provider and Paxos’ Bankchain to bring instant settlement and true delivery versus payment to the London bullion market. Its innovative tokenization process turns physical gold into digital gold tokens, reducing capital charges and opening new opportunities for market participants.
Digital gold tokens can be used as eligible collateral across the globe without leaving the vault. Several global exchanges and clearing houses accept gold as collateral for trading across multiple asset classes, not just in precious metals.
"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. 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”, Luc Vantomme, Managing Director and Global Head of Innovation, Euroclear added.