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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.

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Paxos and Euroclear executives announced the collaboration during this weeks SIBOS annual conference in Geneva, Switzerland. Paxos CEO Charles Cascarilla told attendees the partnership will producethe 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, Cascarillatold 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 providesprompt settlement and automationto bringmore fluid efficiency to post-trade capital markets, Cascarilla added.

The company has raised a total of $28.25 million USD through two funding rounds. Last year, withinvestors such as the Digital Currency GroupandBlockchain Capital, the company acquired $25 million in one Series A funding round. Cascarilla and partners first launched Bankchain under the cryptocurrency exchange itBits umbrella.

Euroclear claims it has a reputation as a trusted post-trade services provider witha double-A rating from Standard & Poors.

The companyworksto provide settlement and safekeeping for securities, equities, bonds, and derivatives to investment funds. Italso believes blockchain technology can transform the post-trade markets.

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 providinga more frictionless environment.

As a neutral market infrastructure, with a track record of providing high quality, reliable post-trade services to some of the worlds 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, Euroclears 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.

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 companyis startingwith the London Bullion and precious metals markets.

What do you think about Pax and Euroclears blockchain-based gold settlement Bankchain? Let us know in the comments below.

Source: Paxos

Images via Shutterstock, Pixabay.

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