Some heavy hitters in global banking have teamed with traders to create a blockchain-based platform for financing commodities trading.
Involved in this venture, to be called komgo SA, are ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Societe Generale.
The komgo venture will be based in Geneva, Switzerland, and is due to go live later this year. It will be developed with blockchain technology company ConsenSys.
Reuters reported komgo will start with energy trading, specifically crude cargoes in the North Sea. Then, early next year, komgo will cover agriculture and metals trading.
As others have learned, blockchain technology can process and settle transactions quickly, without the need for third-party verification and a tower of paperwork. Instead, a trader will use a digital letter of credit.