London gold association plans to approve blockchain trackers
By Peter Hobson
LONDON, Oct 19 (Reuters) - The London Bullion MarketAssociation (LBMA) is planning to help modernise and improvetransparency in the industry with an approval process forcompanies using blockchain technology to track the movement ofgold.
The embracing of blockchain, the technology behind bitcoin,aims to exclude from the global supply chain metal that isillegally mined or traded or used to finance conflict.
It comes after the revelation last year that a U.S. refineryhad accepted billions of dollars' worth of gold smuggled fromSouth America.
In March the LBMA asked its 144 members, who include most ofthe world's largest gold refiners, banks and dealers, forproposals 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 processand settle transactions in minutes without the need forthird-party verification. IBM partnered with shipper Maersk tocreate a blockchain-based trading platform for the shippingindustry to improve efficiency, while diamond companiesincluding De Beers have a blockchain platform to trackdiamonds.The LBMA received 26 proposals from companies ranging fromstart-ups to major technology firms, LBMA's executive boarddirector Sakhila Mirza told Reuters.
Mirza declined to name any of the companies but sourcesinvolved in the process said they included IBM. IBM did notreply to a request for a comment.
Rather than endorsing particular companies, the LBMA hasopted to create a set of standards for services and an oversightcommittee to approve and monitor technology providers that meetthem, Mirza said.
"We need to set up criteria and standards that help usunderstand what is a credible blockchain solution," she said.
"Once those have been appropriately established, the resultwould be a selection of service providers that meet the minimumstandards."
The LBMA sought proposals not only to track gold from mines,many of them in far flung areas, through to bank vaults andjewellery shops around the world - a task made doubly difficultbecause metal must be physically tagged before it can be traced- but also for security features for gold bars to preventforgery.
The LBMA did not insist on use of blockchain, but more than20 of the 26 responses focused on supply chain tracking andincorporated the technology, Mirza said.
She said a first draft of the LMBA's standards for trackingsystems would be put to consultation in the first half of nextyear with the process to approve service providers to startlater in 2019.
(Reporting by Peter Hobson; Editing by Veronica Brown andElaine Hardcastle)
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