Commodities fund Tiberius is seeking to underpin a new world of digital currency transactions with a bullish future for industrial and precious metals, by launching a physical metals-backed cryptocurrency called Tiberius Coin.
The fund, based in Zug in Switzerland, has more than $300 million of assets under management. In March, it will allow initial investment in the currency ahead of an ICO, or Initial Coin Offering, later this year.
Tiberius Coin, or “T-coin,” will be backed by a basket of physically warehoused metals, from cobalt to copper and gold, and comes amid a global wave of interest in digital currencies from the financial community and retail investors alike.
“We are offering a solution that someone can pay for their coffee in 20g of copper, 10g of [aluminium] and 5g of zinc,” fund founder and chief executive officer Christoph Eibl told Metal Bulletin on Wednesday January 31.
Cryptocurrencies such as Bitcoin are digital currencies developed to allow holders to make secure transactions immediately, anonymously and without the influence of governments.
Transactions are facilitated across an open and cryptographically protected digital leger called a blockchain. Earlier this month, major agricultural trader Louis Dreyfus announced that it had used a blockchain system to trade and deliver soybeans to China, backed by banks ABN AMRO, ING and Société Général.
“I think, first and foremost, we believe that digital currencies, in principle, as a utility, have a reason to [exist],” Eibl said.
“We are now in the position to bring a digital currency which has the same attributes as most, but with the big difference that every single token is backed by metal with tangible value,” he added.
In doing so, Tiberius will be looking to use more than a decade of experience gained in trading metals and dealing in highly regulated markets.
“You’ve seen a couple of young start-up [companies] try to link cryptocurrencies to gold, but they don’t have any experience in the gold or metals space,” Eibl said.
Tiberius Coin will launch with three versions, each of which will be backed by separate metals groups.
One will be for metals expected to support the development of electric vehicles, such as cobalt, while another will be based around electronics, involving copper and tin. The third will concern “stability” or precious metals.
In backing T-coin with physical commodities, the company hopes to attract interest from investors looking for exposure to metals, as well as others looking for a means of storing value.
“It’s a nicely diversified base that will also deliver a positive investment theme for the future,” Eibl said.
The backing of physical metals and the intention to be used in day-to-day transactions also distinguish T-coin from its crypto-rivals, Eibl added. In recent months cryptocurrencies such as Bitcoin, Ripple and Litecoin have fluctuated wildly in price amid speculation over their value.
Earlier this week, Deutsche Bank chief investment officer Markus Mueller called for cryptocurrency markets to be properly regulated to develop them into an established asset class.
“Tiberius Asset Management has been regulated for a decade,” Eibl said. “We understand all the regulatory frameworks from a commodity side, we just had to find a solution from the technology side.”
The level of interest from the metals and cryptocurrency worlds has been “kind of scary,” Eibl said, noting that the company has been “overrun” with inquiries, CVs and offers of partnership.
“Honestly,” he added, “the reception we’ve had so far makes us feel confident that we’re on the right track.”