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A group of crypto and precious metal companies formed a consortium and launched a first-ever Gold-backed digital currency with the ticker DGLD on the Bitcoin blockchain.
Europe’s largest crypto assets manager CoinShares, with the leading provider of cryptocurrency products including the world’s most popular crypto wallet, Blockchain Luxembourg S.A., and the Swiss gold trading firm MKS have joined hands to launch a gold-backed digital currency (stablecoin). The consortium has been developing the DGLD network for more than two years and at last, they have digitized more than $20 million worth of gold.
This newly formed token will represent the physical gold held in Swiss vaults managed by bullion brand PAMP in Ticino, Switzerland. The blockchain infrastructure development firm CommerceBlock has also played a vital role in tokenizing the gold using the Ocean sidechain developed by the firm in London.
According to the announcement “each DGLD token is the digital equivalent of 1/10th of a troy ounce of gold, vaulted in Switzerland.” To create a new DGLD token, the partners must allocate London Bullion Market Association (LBMA) gold and place in a Swiss vault. The DGLD token will be created in the amount that represents the specific quantity of gold held in the vault and then send to the digital wallet.
Danny Masters, Chairman of CoinShares, commented about the new joint crypto venture:
“DGLD combines the stability of the world’s most enduring asset, gold, with the security of the world’s most resilient network, Bitcoin. You can now have the peace of mind of Swiss vaulted physical gold, with the same convenience, but not the same layers of middlemen, as owning a gold ETF.”
DGLD token will not be subjected to the same norms as gold-based investment products such as gold ETFs. The token falls under category five of the Swiss Financial Market Supervisory Authority’s (FINMA) taxonomy on stablecoins, which is related to digital assets linked to commodities such as gold, oil, etc.
The token will be available for trading through Blockchain Luxembourg S.A.’s recently launched cryptocurrency exchange, The PIT. However, the official date of DGLD going live hasn’t been announced yet. the founding fathers of the DGLD token are planning to make DGLD available on other crypto exchanges in the future.
MKS president Marwan Shakarchi commented:
“With DGLD, we have created a new gold property format that allows you to digitally use physical gold stored in a vault 24/7. DGLD has the potential to profoundly change the way gold is used on a daily basis.”
According to the announcement, DGLD token will be available for both retail and institutional grade investors and to users in more than 200 countries.
This is not the first gold-backed stablecoin hurled into the market. The crypto company Paxos has already been granted regulatory approval by the New York State Department of Financial Services to roll out a stablecoin pegged to gold.