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Digital Gold Tokens Hit Market

Digital Gold Tokens Hit Market

The Reserve Bank of Zimbabwe (RBZ) will release the gold-backed digital tokens to serve as both an instrument for store of value and transacting.

The bank has since invited individuals, corporates and other entities to subscribe for the securities, which can be bought in local or foreign currency.

Applications for the gold-backed digital tokens must be for a minimum of US$10 for individuals and US$5 000 for financial institutions, corporates and other entities.

The application forms will be available from the RBZ, commercial banks, building societies and the People’s Own Savings Bank (POSB).

Features of the gold-backed digital tokens include RBZ as issuer, vesting period of 180 days, use as platform to save, ability to invest and transacting in gold, physically held by the central bank.

Last week, the RBZ said the offer for the tokens opens tomorrow and closes on Wednesday, while payment should be made on Thursday.

Special features of the gold-backed digital tokens include a prescribed asset status, acceptability as collateral and tradability, bearer instrument and settlement in both local and foreign currency.

In a statement last week, the RBZ the digital tokens “are being issued to expand the value preserving instruments available in the economy, enhance divisibility of the investment instruments and widen the access and usage by the public”.

“The digital tokens will be issued for investment purposes with a vesting period of 180 days and redeemable in the same way as the existing physical gold coins.

“The digital coins will be available for sale through banks, in both foreign and local currency,” said the RBZ.

Banks will create dedicated or specific accounts for the holding of the gold backed digital tokens.

Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold backed digital tokens.

“The digital tokens held in either e-gold wallets or e-gold cards will be tradable and capable of facilitating Person2Person (P2P) and Person2Business (P2B) transactions and settlement.

“It, therefore, means that the gold backed digital tokens would be used both as a means of payment and a store of value,” said the central bank.

The gold backed digital tokens are issued in terms of the Reserve Bank of Zimbabwe Act, which empowers the central bank to buy, sell, discount or rediscount bills of exchange and promissory notes drawn or issued for commercial, industrial or agricultural purposes.

Pricing of the gold backed digital tokens in foreign currency shall remain the same as the pricing model of the physical gold coins, as informed by the international gold price, as determined by the London Bullion Market Association PM fix.

Payment for the digital tokens or physical gold coins in local currency shall be at a 20 percent margin above the willing-buyer willing-seller interbank rate.

“Investors cannot use borrowings to finance the purchase of tokenised gold tokens. The Financial Intelligence Unit shall take appropriate action in respect of any suspicious source of funding. Financial institutions are required to exercise Know Your Customer principles,” the RBZ said.

The digital tokens will be issued in milligrammes, which is one thousandth of a gramme, through the custodian banks within the Central Securities Depository payment system.

Source | Herald

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