Kitco to start trading gold-backed stablecoin

Canadian precious-metals retailer Kitco Metals will start trading its new cryptocurrency – dubbed Kitco Gold (KGLD) – that will be fully backed by physical gold held in reserve vaults while tracking the real-time market value.

The company expects to launch the service in the next few weeks.

As a regulatory compliance provider, Kitco chose Hong Kong’s First Digital Trust that will also arrange all know-your-customer and anti-money laundering procedures, as well as funds processing and final authorisation.

Stablecoin issuer Stably has been appointed to provide smart contract technology for minting and burning KGLD on the Ethereum network while Tradewind Markets will act as the assistant in the settlement.

The company stated the intention of creating this ERC-20 stablecoin is to combine the structure of gold investments with the scarcity, flexibility, and upside potential of the crypto world.

It also represents an answer to cautious investors who may be uncomfortable launching into the world of cryptocurrency investing, or those who are looking for more secure investments.

John Dourekas, chief business development officer at Kitco Digital Metals Group, commented that KGLD acts as a digital receipt of physical gold ownership and provides institutional investors with a “robust” asset class.

“Investors will have a competitive alternative to traditional gold products such as gold ETFs, with the additional benefits of real-time trading and settlement enabled by blockchain technology,” he said.

Even though Kitco’s entrance to gold-backed stablecoins follows Paxos Gold and Tether Gold – launched in 2019 and 2020 respectively – it is expected that market participants will welcome the “gold bug’s attempt to pry some of the market share from dominant stablecoin issuers”.

Earlier this year, Kitco Metals Inc offered digital gold on Tradewind’s secure electronic platform, VaultChain, giving investors of all levels the opportunity to diversify their portfolio.

“The new digital platform completely democratises the gold market as investors worldwide can buy gold to fit their investment needs and goals as part of a diversified portfolio with no minimum purchase required,” Bart Kitner, president of Kitco Metals said.

“Kitco has always been a leader within the bullion gold market and this new disruptive technology is a perfect fit with our mission of making it easier for people to buy and sell precious metals.”