First Swiss Digital Asset Custody Creates Token Backed By Gold

SEBA, a Swiss bank that touts itself as the future bank, has created a digital gold token backed by actual gold. The bank CEO, Guido Buehler, said that gold has always been an essential commodity in financial markets, citing the commodity’s impressive market cap, which lies in trillions of dollars. Buehler revealed that gold had proven to be a trusted shield against inflation as well as a significant investment to protect capital.

The Concept And Potential Benefits

Today, the firm launched the digital token, regulated and tied to real gold. The bank disclosed that users could exchange the digital token for real gold upon request. The bank, which prides itself in combining new financial technology with traditional banking services, revealed that their regulatory backing and the relatively stable prices of gold could eventually qualify the token as a stablecoin.

The concept of the digital gold token closely resembles that of the gold standard, where the country’s gold reserves backed the value and supply of currency. The United States left the gold standard in the early 70s. The shift meant the United States no longer adhered to the Bretton Woods Standard that pegged $35 to an ounce of gold. 

A perk of currencies backed by gold is that they are resistant to inflation. The downside is that a limited supply of gold means that the hands of governments are tied in times of economic downturn like the recent pandemic. If the gold standard still backed the dollar, it would have made the release of stimulus checks improbable. No country runs on the gold standard anymore.

The SEBA executive reiterated that users could swap the tokens for actual gold on request. He went on to add that the coin provided a hassle-free and economical way to gain ownership of the precious metal. The initiative came after the bank created a system to get returns on their crypto holdings.

Other Notable Strides Of The Digital Asset Bank

In October, the bank had announced that investors could receive earnings through the crypto lending programs it offers. Guido Buehler explained that the fascinating world of cryptocurrency and blockchain technology had spurred interest in programs that led to returns like staking, lending, decentralized finance, etc. The firm said interested institutions would be able to earn from these services.

The firm revealed that it currently offered three proof-of-stake tokens from which investors could earn returns for staking. However, the financial institution has promised to increase the options available to customers in a short while. The bank was notably the first to become approved as custody for digital assets in Switzerland. 

The Swiss bank was founded three years ago and had always been committed to digital assets services. They would eventually get the permit to run custodian services at the ending of September this year. The achievement made it a pioneer cryptocurrency bank to achieve custodian services. In 2020, the Bank of France invited applications from SEBA to explore the idea of a digital Euro.