Leading gold trading bodies, the World Gold Council and Boston Consulting Group, have proposed a new platform to modernize the way precious metals operate in the digital financial system.
The World Gold Council announced Thursday that it has published a white paper on “Gold as a Service,” a new platform that “supports the issuance and operation of scalable and interoperable digital gold products.”
The open platform connects the physical storage of gold to the digital systems used to issue and manage tokenized gold products.
“This model aims to reduce operational complexity, improve access and increase consistency across digital gold products by standardizing key market processes such as custody coordination, reconciliation, compliance and redemption,” the World Gold Council said.
While crypto-native tokenized gold products include Tether Gold (XAUT) and Pax Gold (PAXG), which have formed their own custody, compliance, and redemption models, the World Gold Council’s standards are likely to have more influence among financial institutions due to their industry association prominence.
Features such as audit, substitutability and liquidity
Key features of Gold as a Service include standardizing the issuance and management of tokenized gold, increasing the fungibility of digital gold, incorporating audit and assurance, enabling interoperability with existing financial rails, and increasing liquidity in lending and borrowing markets.
World Gold Council CEO David Tait said financial services were undergoing a “rapid and widespread digital transformation” and gold also needed to evolve to maintain its role in the global financial system.
“Shared infrastructure will help gold become more accessible, more easily traded, and fully integrated into the modern financial system. This will ensure that gold remains as valuable tomorrow as it has been for thousands of years,” he added.
Related: Retailer gold purchases triple in past six months as Wall Street sells off
“The question is no longer whether gold will be digitized, but how it can participate in the modern financial system without compromising its physical integrity,” said Matthias Tauber, managing director and senior partner at Boston Consulting Group.
Commodities account for 20% of the tokenized asset market
According to RWA.xyz, tokenized products such as gold account for 20%, or about $5.5 billion, of the total on-chain value of tokenized real-world assets, and this segment has grown 340% in the past 12 months as demand for gold soars.
Tether’s tokenized gold products have a market cap of $2.6 billion, up 17% in the past 12 months, while Pax Gold’s market cap is $2.3 billion, according to CoinGecko.
Cryptocurrency exchange Bybit on Thursday launched a high-yield tokenized gold product that allows users to earn interest on Tether Gold.
Tokenized gold and commodities represent 20% of the total tokenized RWA market. sauce: RWA.xyz
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