SEBA Bank is introducing a digital token that will allow investors to purchase actual gold housed in Swiss vaults over the Ethereum network.
The new product from the Swiss bank is an ERC-20 token, which means it is stored and exchanged on the world’s second largest blockchain. This is in contrast to typical digital gold products, which are not kept on a blockchain and hence serve just as IOUs from an issuer.
Blockchains, like Ethereum, provide a higher level of investment security since they do not require a trusted third party to confirm digital asset ownership.
Instead, they employ a decentralised ledger that is shared by everyone in the network and maintains a single, indisputable record of all transactions. This is then enhanced by Ethereum’s multi-party smart contracts — an additional layer of functionality capable of, for example, verifying the serial numbers of actual gold bars assigned to certain digital holdings.
SEBA Bank’s CEO, Guido Buehler, called the new gold token a “landmark development” for the precious metals business, not because it’s the first of its kind on the market, but because of SEBA Bank’s track record of institutional-grade regulatory compliance.
“As issuance and custody of the token is managed by a Swiss bank with a banking and securities dealer license, the token platform can be trusted by institutional investors to offer a secure and regulated platform for investment,” he emphasized. “In addition, the custody of the physical gold is with regulated Swiss firms, ensuring that asset security is held paramount for both the digital and physical nature of the product.”
Token holders can redeem their real gold from SEBA Bank’s partner refineries at any time, without suffering the transport and storage fees charged by traditional digital gold platforms like BullionVault. Each token is worth 1g ($57) of metal and is divisible to four decimal places.
In digital asset marketplaces, it is referred to as a “completely compliant stablecoin,” mimicking the role of fiat stablecoins Tether (USDT) and USDC.In digital asset marketplaces, it is referred to as a “completely compliant stablecoin,” mimicking the role of fiat stablecoins Tether (USDT) and USDC.