New York based institutional Bitcoin exchange and blockchain technology company, itBit, has been selected by Euroclear group to explore opportunities for creating a next generation settlement service for the London gold market.
If you are not familiar with it, the importance of the group testing blockhain settlements stems from the fact that just last year Euroclear settled the equivalent of €675 trillion in securities transactions and held €27.5 trillion in assets for its clients.
The settlement of unallocated gold is a very capital-intensive process. Euroclear and itBit explain that they are working with other relevant market participants to develop a service to significantly minimize risk leading to a reduced capital charge, offer true delivery versus payment and reduce balance sheet constraints.
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itBit says Euroclear has partnered with it because of its proprietary blockchain infrastructure technology and new product, Bankchain. The Bankchain service is a private network of trusted participants that clears, tracks and settles trades in close to real-time.
Angus Scott, Director, Product Strategy and Innovation at Euroclear, commented: “Euroclear is pleased to be working with itBit on this initiative. As an open and resilient infrastructure, our strategy has been to work with relevant industry stakeholders. We have also created an advisory group, which recently convened to discuss the building of the new service with the ambition to make the London bullion market more efficient.”
Chad Cascarilla, CEO of itBit, added: “We are excited to be partnering with Euroclear to develop a trusted digital infrastructure for gold. Precious metals are the first use case for Bankchain, and London bullion is a market in which a distributed ledger can have an immediate benefit.”
This move goes along with Euroclear’s wider intention to use blockchain technology in the business world. The group also joined a French collaboration which coalesced to sign a memorandum of understanding (MOU) to help advance and foster the development of a post-trade blockchain infrastructure for small, medium enterprises (SMEs) in Europe.