INSUBCONTINENT EXCLUSIVE:
London: The London Bullion Market Association (LBMA) is planning to help modernise and improve transparency in the industry with an approval
process for companies using blockchain technology to track the movement of gold.
The embracing of blockchain, the technology behind bitcoin,
aims to exclude from the global supply chain metal that is illegally mined or traded or used to finance conflict.
It comes after the
revelation last year that a US refinery had accepted billions of dollars' worth of gold smuggled from South America.
In March the LBMA asked
its 144 members, who include most of the world's largest gold refiners, banks and dealers, for proposals on how to track gold and prevent
forgery.
Other commodities sectors have already leaped on blockchain, a high-tech ledger that uses a shared database and can process and
settle transactions in minutes without the need for third-party verification.
IBM partnered with shipper Maersk to create a blockchain-based
trading platform for the shipping industry to improve efficiency while diamond companies including De Beers have a blockchain platform to
track diamonds.
The LBMA received 26 proposals from companies ranging from start-ups to major technology firms, LBMA's executive board
director Sakhila Mirza told Reuters.
Mirza declined to name any of the companies but sources involved in the process said they included IBM
IBM did not reply to a request for a comment.
Rather than endorsing particular companies, the LBMA has opted to create a set of standards
for services and an oversight committee to approve and monitor technology providers that meet them, Mirza said.
"We need to set up criteria
and standards that help us understand what is a credible blockchain solution," she said.
"Once those have been appropriately established,
the result would be a selection of service providers that meet the minimum standards."
The LBMA sought proposals not only to track gold from
mines, many of them in far flung areas, through to bank vaults and jewellery shops around the world - a task made doubly difficult because
metal must be physically tagged before it can be traced - but also for security features for gold bars to prevent forgery.
The LBMA did not
insist on use of blockchain, but more than 20 of the 26 responses focused on supply chain tracking and incorporated the technology, Mirza
said.
She said a first draft of the LMBA's standards for tracking systems would be put to consultation in the first half of next year with
the process to approve service providers to start later in 2019.
