Global banks and trading firms are launching the first blockchain-based platform for financing the trading of commodities from oil to wheat, they said in a joint statement on Wednesday.
The platform will be run by a venture called komgo SA, based in Geneva, Switzerland, and is due to go live later this year.
Banks and major trading firms have been testing numerous pilot schemes across commodities over the last few years but this venture will be the first that any firm can join.
The komgo 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.
Blockchain, originally the platform behind cryptocurrency Bitcoin, is viewed by many as a solution to trade and settlement inefficiencies, and to improving transparency and reducing the risk of fraud.
A high-tech ledger, blockchain uses a shared database that updates in real-time and can process and settle transactions in minutes without the need for third-party verification.
Instead of sharing a mountain of paperwork between a long list of parties, a trader will instead be able to use a digital letter of credit, speeding up transactions considerably.
komgo will first be used for energy. The first trades will be crude cargoes in the North Sea, the benchmark setting region for much of the world's crude trading.
From early next year, komgo will widen to agriculture and metals.
The firm will work alongside Vakt, an energy trading platform run by many of the same shareholders in komgo.
"The launch of komgo SA highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network within commodity trading" said Souleima Baddi, Chief Executive Officer of komgo SA.
komgo will provide the financing via blockchain for all commodities and can scale itself up to new and emerging commodities.
The platform will be developed in partnership with blockchain technology company ConsenSys.