Citigroup, ConsenSys among high-profile firms partnering to digitalize commodity trade with blockchain
Fifteen banks, trading firms, and an inspection company have joined forces to start a new venture under the brand name komgo SA. The venture plans to develop a blockchain–based platform which will help digitalize the trade and commodity market. According to a statement published on Wednesday, ‘komgo SA will catalyze the world’s commodity trade finance network’.
Many doubted the legitimacy of the website and started to question the validity of the document. All qualms were put to rest when Consensys, one of the entities in the new venture, tweeted that it was working on an Ethereum-based platform for financing commodities trading, along with a host of other companies.
.@ConsenSys is working with Citi, ING, Shell & more on an #Ethereum #blockchain platform for financing commodities trading. Blockchain is viewed as a solution to trade & settlement inefficiencies and to improving transparency and reducing the risk of fraud https://t.co/sv8KZC7MNX
— ConsenSys (@ConsenSys) September 19, 2018
The industrial players who are a part of the venture include ING Groep NV, ABN Amro Group NV, Cooperative Rabobank UA, Macquarie Group Ltd., Mitsubishi UFJ Financial Group Inc., Natixis SA, BNP Paribas SA, Citigroup Inc. and Credit Agricole SA. Koch Supply & Trading LP and inspection giant SGS SA.
“The launch of Komgo SA highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network,” Souleima Baddi, CEO of komgo, said in a statement. The venture aims to become the industry standard for a commodity trade finance network.
komgo plans to develop a digital ledger-based system to record commodity transactions with the help of blockchain technology. The fact that major lenders are a part of the venture will set it a class apart.
At first, komgo will deal with trade operations of oil cargoes in the North Sea. The venture has decided to launch two products by the end of this year.
One product will focus on standardizing and conducting KYC procedures without using a central database. A digital letter of credit is the second product planned by the venture. This letter of credit permits commodity houses to furnish their digital trade data and other documents to komgo SA banks of the customer’s choice.
“The potential that distributed ledger technologies (DLT) have in transforming the commodities sector is clear as evidenced with the success of the Easy Trading Connect experiments. We can now achieve a long-term ambition to improve security and operational efficiency in the commodity trade finance sector,” said Toon Leijtens, CTO of komgo SA.
Image via Shutterstock
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