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(Kitco News) – The tokenization of vital commodities is now underway as Sanmiguel Capital Investment, a financial advisory firm assisting in the tokenization of real-world assets, has announced the launch of Uranium3o8 ($U), the first token to be physically backed by uranium.
Sanmiguel Capital Investment partnered with Madison Metals Inc. to launch $U, which is physically backed by one pound of uranium per token through a forward sales agreement between the two companies.
“Uranium3o8 is the beginning of a new chapter for uranium, and for our firm,” said Madison Metals CEO Duane Parnham. “Tokenization is the next great advancement in the mining industry, and we’re excited to be part of this charge.”
$U is the first digital token to enable the purchase of uranium, and the goal of the collaboration is to “meet the rising demand by simplifying access to uranium price movements for individuals and providing utilities with transparent pricing and traceability from mine to plant,” according to the press release.
Amid the global shift towards clean energy sources, nuclear power has emerged as a leading solution as it offers reliable and consistent energy production when compared to the intermittent performance of solar and wind.
There are currently 60 nuclear reactors under construction around the world, and many countries including Switzerland, Spain, and Japan are working to increase capacity at currently operating reactors, while the UK parliament has urged officials to triple nuclear capacity by 2050.
This suggests that demand for uranium is likely to increase in the years ahead, and $U is intended to help bring greater efficiency to the global uranium market. The Uranium3o8 team is looking to create a “transparent, 24/7 spot market for the commodity – in the process creating a new liquid asset that can also be invested in by individuals and institutions around the world,” the release said.
Up to this point, purchasing uranium has required utilities to negotiate prices over the counter and navigate a number of logistical hurdles and middlemen that amplify the cost and level of uncertainty in the process. “No real spot market for it actually exists,” the release said.
“Our goal is to democratize ownership of this vitally important resource,” said Ryan Gorman, head of strategy at Uranium3o8. “Utilities are seeking easier ways to obtain uranium, and individuals are starting to view it as an emerging asset class worth inclusion in their portfolios; and to enable mining firms to better finance operations for extracting previously illiquid resources from the earth.”
In order to take physical delivery of the uranium, token holders will be required to meet strict regulatory requirements, and must hold a minimum of 20,000 $U tokens (representing 20,000 pounds of uranium) and be able to prove to Madison Metals that they are qualified under local laws and regulations to receive it.
Once delivery is complete, the tokens tied to the delivered uranium are burned. The Uranium3o8 team is responsible only for the issuance and administration of the token.
The uranium backing $U is being sourced from Madison’s in-the-ground resources in Namibia, and 20 million pounds have initially been pledged to the project.
The token will not be available to investors in the U.S. at launch, however. “$U is not registered under U.S. securities laws, U.S. derivatives laws, or the securities and derivatives laws of any other jurisdiction,” the release said. “$U is not available for U.S. persons, entities with U.S. parent companies, entities with U.S. subsidiaries, or persons from other prohibited jurisdictions.”
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
