On Tuesday, Dubai FinTech company OneGram announced it would offer a gold-backed digital currency called OneGramCoin with the hopes of raising over $500 million in capital.
If reached, this target would be the largest raised during an initial coin sale, OneGram CEO Ibrahim Mohammed told Reuters. Likewise, Mohammed noted that the sale of OneGramCoin is the first digital coin offering compliant with Islamic laws.
As the name suggests, the value of a OneGramCoin (OGC) is backed by the equivalent value of one gram of gold. To ensure the coin is gold-backed, OneGram reportedly partnered with gold trading company GoldGuard.
A maximum total of just over 12 million OGC will reportedly be sold in OneGram’s initial coin offering (ICO), slated to begin on May 21 and run through Sept. 22.
According to Mohammed, almost 50 percent of the initial coin offering has been committed. One of Dubai’s largest banks, Tabarak Investment Bank, reportedly plans to sell €100 million ($108.9 million, OGC 2.24 million) to clients.
Ultimately, OneGram looks to create a payments solution centered around OGC that looks to compete against other major networks by not requiring interchange fees.
“We’re creating a merchant service program, and we will offer these tokens to retailers for free,” Mohammed was quoted as saying. “If you’re paying with Mastercard or Visa, you have to pay 2.5 percent as a retailer to Mastercard. We are creating a payment gateway where the retailer pays nothing.”
Backing OGC with gold is an interesting solution to quell the volatility and capricious nature (and reputation) of other digital currencies on the market today.
Additionally, the digital currency represents a major innovation in the growing Islamic finance space. According to data from PricewaterhouseCoopers cited by Reuters, Islamic finance assets account for about 1.2 percent of all banking assets globally, some $1.2 trillion.
This looks to change, however, as estimates project the industry could nearly double to $2.6 trillion within a year.