Good news for traders across the world; global banks, along with international trading companies, have recently announced the first blockchain-based platform, called Komgo, that will allow financing for trading of commodities ranging from oil to wheat.
The platform, which will be developed in partnership with blockchain technology company ConsenSys, will go live later in 2018, and will be run by Switzerland-based Komgo SA, whose founders include 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 introduction of the blockchain-based platform will be prove to be a boon for traders, as they will be able to use a digital letter of credit, instead of sharing bundles of paperwork between a long list of parties. The energy industry will be the first sector that will be using the Komgo platform. The first trades will include crude cargoes in the North Sea, which is considered as the benchmark setting region for most of the world’s crude trading. And later in early 2019, the platform will expand to agriculture and metals.
Karin Kersten, head of trade and commodity finance at ABN AMRO, said that Komgo will be an open financing platform, changing finance processes around commodity financing, which will increase efficiency and reduce risks and costs. “The platform is designed to be connectable to other commodity platforms”, she said.