Dubai's DMCC partners with ComTech for blockchain-based gold trading
Quick Take
- ComTech will issue tokens backed by gold deposited in DMCC vaults.
- The gold-backed tokens will be issued on the XDC blockchain network.
Dubai Multi Commodities Centre (DMCC) has partnered with ComTech Gold to enable blockchain-based trading of physical gold bars.
ComTech will deposit physical gold bars in DMCC-approved vaults, according to an announcement on Monday. DMCC is the largest free-trade zone in the United Arab Emirates. These gold bars deposits will also be registered on Tradeflow, an online platform created by the DMCC to track the provenance of physical commodities kept in its vaults in the UAE.
The actual tokenization will happen on the XDC blockchain network with the creation of ComTech Gold Tokens, or CGO. Each CGO will represent one gram of gold stored in a DMCC vault. Every gold bar deposit will carry a Tradeflow warrant for additional security and transparency.
Both partners say they are hoping to simplify the gold trading market. The aim is to use blockchain technology to create an investment-grade product for gold. With CGO tokens, the DMCC and ComTech say investors do not have to worry about storing and transporting physical gold bars. Tokenization also makes it easy for investors to trade fractional shares of a single gold bar, the announcement stated.
The UAE ranks fourth on the list of global gold consumption behind China, India, and the United States. Gold consumption in the UAE reached 12.5 tonnes in Q1 2022, a 50% increase from the previous year.
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