Page 15 - Bullion World Volume 03 Issue 07 July 2022

Wholesale Digital Gold: Unlocking new use cases

Wholesale Digital Gold: Unlocking new

use cases

The proposed Ecosystem, by serving as a complementary ‘third foundational pillar’ of the
gold market alongside existing allocated and unallocated gold settlement, capitalises on the
respective strengths of the existing allocated and unallocated approaches and addresses
some of the friction in the current market. Through leveraging a new legal structure, the
Ecosystem can unlock additional utility and function by creating a unique solution with a
combination of characteristics previously not available together:

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F Fractionalisation C Credit Exposure
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Within the Ecosystem, PGI would be PGI Holders would have no credit
fractionalised into units of one exposure to vault operators,
thousandth of an ounce, consistent custodians, or other intermediaries.
with unallocated gold and
significantly smaller than one gold
bar, allowing for smaller units of
trading and investment of allocated C Collateralisation
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gold and in turn facilitating broader
access to the gold market. PGI could be utilised as collateral
in various financial transactions.
PGI have been structured to be
eligible collateral under EU and UK
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R Ready Transferability EMIR and Dodd-Frank Act, which,
subject to any contractual
PGI have been designed for restrictions, should also allow PGI
seamless electronic transfer within to be delivered to EU and UK CCPs
the Ecosystem. The Ecosystem will and FMIs (see the section titled
accommodate on-ramping and ‘PGI as collateral’ on page 7 for
off-ramping of gold, with more information).
corresponding adjustments to PGI.
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R Regulatory Compliance
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P Payment Integration
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The Ecosystem would be built to
The Ecosystem would be compatible act as a settlement system for OTC
with both traditional payment rails gold trading and to comply with
and emerging digital payment relevant regulatory regimes as
solutions (see the section titled unallocated and allocated
‘Integration of payments into the settlement does today. PGI are not
Ecosystem’ on page 9 for more securities or digital assets; they are
information). direct, fractional ownership rights in
segregated gold.
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R Regulatory Capital l
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The Ecosystem and PGI have been
designed to minimise regulatory
capital exposures for participants.
Whitepaper: Pooled Gold Interests and Wholesale Digital Gold – A New Vision for the Gold Market 6 6
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