Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
The blockchain and crypto ecosystem is evolving at a fast pace, and before SEBA, other prominent players in the space have already floated gold-backed tokens for users to invest in.
Zug, Switzerland-based digital asset financial services provider, SEBA Bank has launched a tokenization service that lets users hold tokens that are fully backed by physical gold. According to a Forbes report, SEBA’s products exist as an ERC-20 token, leveraging the security and the diverse ecosystem that is inherent in the Ethereum blockchain ecosystem.
As the company pointed out, its product is markedly different from the other gold derivative investment products, such as Exchange-Traded Funds (ETFs) or Over-The-Counter (OTC) deals. This is because owners of the SEBA gold token can redeem the physical precious metal based on the allocation each user has.
The SEBA token can also be used more functionally as a stablecoin and for use in cryptocurrency-focused transactions, or as a store of value. The new token is arguably projected to have very wide acclaim amongst industry participants as SEBA is a strictly regulated digital currency service provider, and has applied this standard to all of its products including the Gold-backed stablecoin.
“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,” said Guido Buehler, SEBA Bank’s Chief Executive. “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.”
Each of the SEBA tokens represents 1g ($57) of the metal and is divisible to 4 decimal places. The redemption of the tokens can be done from any of the bank’s refinery partners and token holders will be shielded from the bogus fees that may be incurred from traditional digital gold platforms including but not limited to BullionVault.
SEBA Bank Gold Token May Attract More Value Added Services
Holding gold as a form of crypto already offers a unique value for the investor as the need to provide security safeguards for the acquired gold is notably limited. With the digital tokens, users can also do much more, including trading them as stablecoins.
The blockchain and crypto ecosystem is evolving at a fast pace, and before SEBA, other prominent players in the space have already floated gold-backed tokens for users to invest in. One of these is New York-based exchange, Paxos Trust Company which floated its PAX Gold (PAXG) stablecoin back in 2019.
Stablecoins are featured prominently in the Decentralized Finance (DeFi) ecosystem where users tend to earn yields on their assets, a product that is being offered by outfits such as BlockFi, Nexo, and Celsius. While SEBA has not confirmed the launch of lending or other earnings products for the gold-backed tokens, the chances of proffering this offering in the near future cannot be ruled out.
“Investors are looking for exposure to a broad range of assets, including stablecoins, crypto yield products, and tokenized assets,” Buehler said. “SEBA Bank is catering to this demand and opening access to the gold markets for investors in the form of a regulated, cost-effective, and future-proof digital token. Further token services will be rolled out on an ongoing basis over the coming months.”