Dubai Multi Commodities Centre (DMCC) to Issue Gold-Backed Tokens

Dubai Multi Commodities Centre (DMCC) to Issue Gold-Backed Tokens

The Dubai Multi Commodities Centre (DMCC) has inked a new partnership with Comtech Gold to digitize gold trading. The DMCC said the tokenized precious metals are backed by DMCC Tradeflow-registered gold bars. Each tokenized gold bar "will be backed by a Tradeflow warrant."

DMCC to Digitize Gold Bars Using the Xinfin Blockchain

The Dubai Multi Commodities Centre (DMCC) was established in the Free Trade Zone of the UAE in 2002. It is considered an important hub in the region for commodity trade and enterprise. DMCC is one of the many free trade zones in the United Arab Emirates (UAE), like the International Free Zone Authority (IFZA) and Jebel Ali Free Zone Authority (JAFZA). The DMCC announced a partnership with Comtech Gold on November 21, 2022. The UAE Free Trade Zone plans to tokenize gold settlement.

DMCC has announced the launching of a crypto token named "Comtech Gold Token" (CGO), which will be minted using the Xinfin Protocol (XDC) blockchain network. Xinfin is called an "enterprise-ready hybrid blockchain" that combines "the power of public [and] private blockchains with interoperable smart contracts."

Each CGO token will be backed by Tradeflow-registered gold bars and an attached Tradeflow warrant. Tradeflow is an online UAE commodities platform that was launched in 2012. The CGO Tradeflow listing and warrant add "additional security, transparency, and real-asset allocation," according to the DMCC.

Comtech Gold Token (CGO)

Each CGO token contains one gram of.999 fine gold, which is "Shariah compliant and fully backed by the physical gold form." Gold bars that have been tokenized will "feature unique ID numbers and certificates direct from the refineries." Ahmed Bin Sulayem, the executive chairman, and CEO at DMCC believes there’s a need for tokenized real-world assets like CGO.

"Recent market events have highlighted the need for greater transparency and crypto tokens backed by the underlying, real-world assets," the DMCC CEO said. "Our partnership with Comtech Gold to enable the trade of tokenized gold bullion backed by DMCC Tradeflow warrants addresses this need head-on."

The Comtech Gold Token (CGO) joins a handful of other gold-backed tokens that are in existence. Paxos has issued tokenized gold ounces, and the company’s PAXG tokens have a market valuation of around USD 476 million. Tether issues gold-backed tokens called XAUT, and the project has a market cap of around USD 420 million as of November 23, 2022.

The Perth Mint also issues gold tokens, and the PMGT market has an overall market cap of around USD 2.16 million. Kitco, a precious metals firm and media company, has an ERC20 gold-backed token called Kitco Gold (KGLD), but the project has not seen much fanfare since it was announced.