The London Bullion Market Association (LBMA) has gone live with its Gold Bar Integrity (GBI) Database. It standardizes and centralizes data related to the responsible sourcing of the gold, and the country of origin of gold held in London vaults, but the ownership data remains with custodians. The solution uses the Axedras Bullion Integrity Ledger, a system based on the R3 Corda enterprise blockchain.
The LBMA and World Gold Council first partnered with Swiss startup Axedras in March 2022 with the WGC investing a couple of months later. This was for the LBMA’s broader Gold Bar Integrity Ecosystem, where the database is a single aspect. However, the contract for the GBI database was only awarded last March.
“The GBI Database will initially focus on two crucial datasets: Refiner Data and London Vault Data,” said Ruth Crowell, LBMA CEO. “This means faster, more secure data collection and processing. Beyond this, the platform’s ability to automate risk identification and flag potential issues quickly will play a vital role in enhancing confidence across the market.”
Currently refiners provide responsible sourcing data via email. Now they will upload the data directly to the database, with many already onboarded. London custodians will be required to submit bar-level data for gold and silver bars.
The system works by creating digital twins, not only for gold bars but also for gold grains and semi finished products. This is used to create provenance for the gold supply chain.
Gold tokenization
However, these digital twins for the finished product can also support tokenization which could reduce settlement risks and enable vaulted gold to be easily used as tokenized collateral to meet margin requirements at clearing houses. The World Gold Council participated in such a pilot last year. There have been several gold tokenization initiatives targeting consumers. But last year HSBC tokenized its vaulted gold.
Turning back to Axedras, a key feature of its permissioned blockchain, is it only enables confidential data to be available to those that have the right to see it. This contrasts with encryption solutions where someone might hold a copy of the data but not have the key to be able to view it. With Corda, an unauthorized person does not have the data at all.
