Capital markets News

Turkish stock market subsidiary tokenizes gold

gold bullion

Earlier this week, Turkey’s Istanbul Clearing, Settlement and Custody Bank (Takasbank) launched its digital gold trading platform based on blockchain technology. Dubbed as BiGA Digital Gold, the digital asset is fully backed by physical gold reserves with the Borsa Istanbul.

Takasbank is a subsidiary of Borsa Istanbul and acts as a central counterparty for clearing and settlement for Turkey’s stock exchange. In turn, Turkey Wealth Fund, the government-owned sovereign wealth fund owns 90% of Borsa Istanbul.

The Digital Asset Transfer Platform will enable trading of the gold-backed tokens called BiGA, each unit representing one gram of gold in Borsa Istanbul’s vaults. The platform provides services such as issuance of new tokens when gold is deposited, redemption of tokens to gold, transfer of tokens between participants and reconciliation of transactions. Additionally, the system enables around the clock peer-to-peer trading of digital gold.

The value of physical asset-backed tokens moves in tandem with the real-world value of the asset backing it. Additionally, such a system allows investors to buy fractions of the commodity instead of bullion.

Ledger Insights previously reported on the development of the blockchain platform. At the time, Takasbank said the platform is based on a variation of JP Morgan’s Quorum blockchain technology, the private version of Ethereum.

The trial for BiGA Digital Gold was launched back in 2018. Ziraat Bank, Vakıfbank, Garanti BBVA, Albaraka Türk Participation Bank, Kuveyt Türk Participation Bank and Ziraat Participation Bank were part of the testing.

Participating banks need to deposit physical gold in Borsa Istanbul vaults. The platform enables transaction privacy, with only regulators able to monitor the trades. Additionally, integration, reconciliation capabilities, monitoring and reporting are provided between the BiGA Platform and Gold Transfer System.

Takasbank has developed the Gold Transfer System with help from The Banks Association of Turkey to enable interbank gold transfers. The Central Bank of the Republic of Turkey has authorized the system and allows investors, who have accounts with participant banks, to digitally transfer their gold balance among themselves.

While the digital asset platform currently trades gold, it should allow the exchange of other digital assets in future. However, Takasbank has not announced any plans to do so. One of the differences between BiGA and other similar gold trading platforms is the use of a private blockchain instead of a public one.

A few months ago, Australian fintech InfiniGold launched a digital token backed by gold reserves held by the Perth Mint. The platform uses a public Ethereum blockchain.

In Indonesia, the Jakarta Futures Exchange is working with Kinesis Money and Allocated Bullion Exchange to develop a platform for tokenized precious metals.

The UK’s Royal Mint was also contemplating a system to offer digital gold, but the project fell apart after a partner pulled out.

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