By Swann Collins, investor, writer and consultant in international affairs. Eurasia Business News – January 17, 2022

Known for its decentralized finance service (DeFi), the Swiss crypto-bank SEBA, launched last month a token backed by physical gold, the Gold Token. The goal of this innovative service is to provide digital ownership of physical gold and benefiting from its store of value.

This token allows customers to benefit from several things :

  • Invest in physical gold in a decentralized way, with a regulated Swiss bank ;
  • A regulated token that offers secure settlement of transactions and exchanges;
  • A token that allows investors to redeem their physical gold on demand and at any time from partner refineries.

SEBA announced that the token is backed by responsibly sourced gold, provides a cost-effective access to the precious metal, and sets a new standard in the stablecoin sector.

The objective of this new service is to be able to benefit from the store of value that gold promises and to use this token as a stablecoin. The Gold Token is described as able to provide stability to protect investors from the volatility of traditional markets and cryptocurrencies .

Guido Bühler, CEO at SEBA Bank, commented : 

“Gold plays a major role in the capital markets. With a market cap of over USD 11 trillion, it offers investors a reliable hedge against inflation and a store of value irrespective of economic turbulence. The gold standard was once the economic unit of account across the globe, forming the basis of our international monetary system. With the launch of our innovative Gold Token, we are building on this history to allow investors to own a fully regulated digital form of physical gold for the first time. Physically redeemable direct from refineries on-demand at any time, our gold token removes the frictions of owning gold for investors and provides a cost-effective solution for owning the asset fit for purpose in the new economy.”

Developed in conjunction with Argor-Heraeus, a leading service provider in the precious metal industry, and aXedras, a blockchain-based precious metal platform, SEBA Bank presents its Gold Token as a booster of investments in precious metals by providing a cost-effective, secure and straightforward solution for investing in gold.

Christoph Wild, CEO of Argor-Heraeus, stated : 

“We are delighted to be part of this project that aims at providing investors with an innovative solution, bringing together the advantages of both digital and physical assets. The possibility of backing digital tokens with physical, responsibly-sourced, gold undoubtedly represents a novel way for investors to access the precious metals sector. Innovation and responsibility are among Argor-Heraeus’ core values since the beginning of our activities and we think that this collaboration is a prime example.”

Based in Zug, SEBA Bank AG was founded in April 2018 and received a Swiss banking and securities dealer license in August 2019. SEBA is a pioneer in the financial industry, building a progressive technological bridge between cryptocurrencies and traditional assets. Guido Bühler, CEO of SEBA Bank, was previously Chief Operational Risk Officer at UBS and also founded the strategic consulting, risk and research company B&B Analytics, later integrated into SEBA Bank.

Our analysis :

This initiative the Swiss bank SEBA can be seen as aiming at bringing together the attractive strength of gold and crypto into one innovative DeFi service. Amid the return of high inflation, investors are willing to hedge some of their wealth from loosing purchasing power. Gold and cryptoassets are usually seen as safe havens against inflation.

Read also : How to invest in gold

The recent figures on the annual inflation in the U.S. (7% over 2021) and in the Euro area (5% over 2021) will fuel the investors appetite towards gold and crypto. Gold prices have risen from 1,527 USD per troy ounce on January 2, 2020 to 1,818 USD per troy ounce on January 17, 2022, after peaking at 2,067 USD per troy ounce on August 2, 2020. Investors still see gold as a great reserve asset. Stocks are also a good investment, since they generate dividends, but the risk of higher rates by central banks threaten the further performance of stock exchanges. Higher rates will also make more difficult to fund real estate purchases throught heavy mortgages. The housing market bubble in the U.S. and in Europe may burst in 2023 or 2024. Such risks advocate for investing in some gold and major cryptoassets.

Read more about gold and inflation with Gold : Build Your Wealth and Freedom

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© Copyright 2022 – Swann Collins, investor and consultant in international affairs.