Paxos, the parent company of the regulated cryptocurrency exchange itBit, announced today that INTL FCStone Ltd., a London-based financial services company, will be the first to use the Paxos Confirmation Service, a tool designed to streamline the post-trade confirmation process for the precious metals market. The service is the first phase of a larger effort by Paxos to build a blockchain-based post-trade solution for precious metals and other related markets.
“The entire market itself is still in many ways anachronistic,” says Paxos CEO Charles Cascarilla. “Being able to change the post-trade processes will create a lot of leverage in terms of automation and freeing up capital that’s tied up because trades take so long to settle.”
In the precious metal market, the two parties involved in a trade must double check the price, volume, and other details of the transaction before it can be settled. This is often done via email or even over the phone. Cascarilla estimates that the error rate for manual precious metal trade confirmations is about 15%. The Paxos Confirmation Service automates this process and reconciles trades instantly.
Although this new service is not based on blockchain technology, Paxos received approval in May from New York’s Department of Financial Services for Bankchain, a blockchain-based post-trade settlement platform. Cascarilla says Bankchain, which will allow Paxos to move a physical asset like gold and the payment associated with that asset between two parties without an intermediary, is the next step in the company’s post-trade solution.
Paxos announced in May that it had raised $65 million in Series B funding, which Cascarilla says will be used to maintain Paxos’ infrastructure for projects like this one and allow it to expand. The company currently has about 80 employees and offices in New York, London, and Singapore.
This isn’t Paxos first attempt to enter the gold market, with an early foray in partnership with Euroclear dissolved last year. According to a statement, Paxos plans to introduce products for additional commodities and FX in the coming months.