Fifteen of the world's largest institutions, including banks and trading firms are launching a blockchain-based platform that promises to feature digital letters of credit (L/Cs).

Called komgo, the developers say this is the first blockchain-based platform for financing the trading of commodities from oil to wheat, according to a joint statement issued by the founders.

komgo founders

The founders of the new company include ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Société Générale.

Based in Geneva, Switzerland, it will be managed and operated as an independent entity.

Digital L/C launch

The first komgo product, expected to launch this year will standardise and facilitate a know-your-customer process without using a central database. The exchange of documents will be executed in an encrypted way over the blockchain on a need-to-know basis.

The second product will be digital L/Cs, allowing commodity houses or other platforms to submit digital trade data and documents to komgo customer banks of their choice.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.