Euroclear develops blockchain gold settlement system, London becomes first pilot

Fintech company Paxos has partnered with Euroclear to bring a new blockchain-based gold settlement method to the London precious metals trading market. The project, called Euroclear Bankchain , aims to use blockchain technology to achieve more efficient post-trade settlement.

London sees first blockchain use case: gold settlement

Executives from Paxos and Euroclear announced the news at the SIBOS conference in Geneva this week. Paxos CEO Charles Cascarilla said the collaboration will bring the first concrete blockchain use case to the London precious metals trading market.

Cascarilla mentioned in an interview that investors and some major players will benefit from this blockchain gold settlement solution.

We are about to bring groundbreaking changes to the market. This change will revolutionize post-trade processing and the overall trading architecture of the global gold market.

Charles Cascarilla sees Bankchain, the result of this collaboration, as a next-generation blockchain settlement platform that can perform instant settlements and whose automated processing can bring greater efficiency to the post-trading capital market.

Introduction of the two parties

Paxos has successfully completed two rounds of financing, raising a total of $28.25 million. Last year, they raised $25 million in Series A funding from investors including Digital Currency Group (DCG) and Blockchain Capital. After that, Cascarilla and his colleagues launched the Bankchain project with the support of cryptocurrency exchange itBit.

Euroclear is a trusted post-trade service provider with a double A rating from Standard & Poor's.

Euroclear mainly provides settlement and custody services for securities, stocks, bonds, derivatives, investment funds, etc. It believes that blockchain technology can reform the post-trade processing market.

Settlement Process

The current post-trade settlement process usually takes several days, and due to the involvement of third parties and auditors, it is also costly and requires a lot of paperwork. The European clearing system said that with the distributed ledger mechanism, clearing can be faster, even more formal, and the cost can be greatly reduced. The Bankchain protocol can reduce the time required for settlement by providing an environment with less friction.

Luc Vantomme, Euroclear General Manager and Global Head of Innovation, said:

As a neutral market system, we are committed to providing high-quality and reliable post-trade processing services to the world's top financial institutions. Usually, we will conduct research with third-party innovators in a collaborative way. This cooperation will ultimately be a win-win situation, where they can profit from their own innovations, and we can bring more flexibility to our own systems.

Gold settlement is a capital intensive process, so we are developing a new system to reduce risk while also reducing balance sheet constraints.

Bankchain distributed ledger can reduce time and risk

Both parties believe that Bankchain is superior to London's traditional precious metals trading system. Cascarilla said the platform can reduce risks for participants and provide real-time tracking and transparent auditing.

The application of blockchain settlement platform will make post-trade processing more rational. In order to prove the practicality of blockchain platform, they will first conduct experiments in London precious metals trading market.