Kinesis, a Shariah compliant monetary system recently made headlines when it partnered with the Indonesian government to launch PosGo Syariah, a physical gold-based digital Islamic product supported by the National Sharia Council. We speak to its CEO to learn about its ambitions and how its collaboration with Indonesia will shape fintech in the Republic.
“We have been working with the Indonesian government for the past five years on this project. Our primary partner is Pos Indonesia who envisioned a digital system that would facilitate highly efficient and cost-effective payments for its large unbanked and underbanked consumers.
“Indonesia also has a large migrant population living abroad and it is important to provide cross-border value transfer capabilities, which is in Phase 2 of what we are doing,” Thomas Coughlin, CEO and founder of Kinesis, tells IFN.
PosGo Syariah is set to be formally launched in Indonesia on the 21st May 2021. The Islamic mobile app integrates Kinesis’s technology and monetary system which enables Indonesians to manage their wealth, trade, save and transact in debt and interest-free gold bullion.
The platform also offers ‘Pos Pay’ which is an e-wallet service, and ‘Gold To Mecca’, a gold-based community savings program for Hajj and Umrah pilgrimage trips.
“Initially, we were working with the Jakarta Futures Exchange (JFX) to build a gold trading division within the JFX and that was when we started talking to the post office. The project then expanded from there and started to involve Kinesis,” Coughlin explains.
“One of the reasons why the project took a long time to complete is because the Indonesian government wrote digital gold trading regulations to facilitate the partnership,” Jai Bifulco, the chief commercial officer at Kinesis, tells IFN.
The partnership with Pos Indonesia also involved the Allocated Bullion Exchange (ABX), the Indonesia Commodity and Derivatives Exchange and Bullion Ecosystem International.
The background
Kinesis, a gold- and silver-backed monetary system, is the brainchild of Coughlin, who envisioned a transformation of the global monetary system.
“Kinesis is a Shariah compliant monetary system with a yield system attached to it. And the reason we can offer a yield and still be compliant with the Shariah law is because there are no debts attached to the yield. We share the transaction fees from real economic activity tradings within the system,” Coughlin tells IFN.
Following three years of careful planning and meticulous design, Kinesis was born. The system is backed by ABX, an online exchange platform for physical bullion, headed by Coughlin.
“At ABX, we watched the blockchain and cryptocurrency industry mature, and when we saw that the industries were gaining prominence and regulators were also looking at it, we felt comfortable enough to further realize our visions and ambitions of taking gold, silver and monetizing it on a global scale,” Coughlin says.
Kinesis is licensed and regulated by the Financial Market Authority of Liechtenstein under its Blockchain Act.
Currently serving approximately 50,000 customers, Kinesis’s target market can be broken up into three main target market verticals.
“One is the precious metal space. So effectively, any one or any organization within the precious metal space and across the supply chain from the precious metal miner all the way through to the end investor or consumer of precious metals.
“The second vertical is the cryptocurrency market, we are targeting traders within cryptocurrency, and the third type of market is the banking and payment space,” Coughlin further explains.
Some of the largest hurdles Kinesis faced when setting up was gaining regulatory approval as the blockchain and cryptocurrency industry back then was slowly gaining prominence.
The present
At present, Kinesis offers gold and silver trading and investment services that are compliant with Shariah principles.
“We offer allocated ownership of gold without any storage fees; we cover the storage fees and insurance fees. The gold and silver are stored in a physical vault. We also have a cryptocurrency trading on our exchange, as well as banking and payments,” Coughlin shares.
Kinesis acknowledges that it is a competitive industry but believes that it distinguishes itself from competitors through its unique and innovative products.
“One of the key differences between Kinesis and all of the competitors is we built our own tech and our own IP [Internet Protocol] address. We built the exchange, the blockchain vault that we run our gold and silver base currencies on. As such, it has allowed us to customize and do a lot of different things when it comes to partnerships,” Bifulco explains.
The future
Looking ahead, Coughlin is looking at launching emerald tokens and possibly launching other cryptocurrencies like Bitcoin and Ethereum on ABX. “We would also like to build a case study on the transactional volume of gold and silver in Malaysia, Southeast Asia and the various parts of the Emirates before introducing our offerings. We believe that countries and governments can benefit from our offerings especially if they are open to hosting their own bullion within the national vaults.”
“Apart from that, we are also building Indonesia’s very first purpose-built gold vault which will be storing a significant portion of the country’s gold,” Bifulco opines.