CME Group has partnered with the UK’s Royal Mint to implement a blockchain-based gold trading platform. On Tuesday, CME Group announced that the platform, which includes technology from companies AlphaPoint and BitGo, is being tested by a select few “major financial institutions” and will be available later this year.
The platform will make it possible for institutions to trade “Royal Mint Gold” or RMG, a new digital token that will be issued by the UK’s coin issuer, The Royal Mint. RMG will reflect direct ownership of physical gold bullion, as 1 RMG will represent 1g of gold within the Royal Mint’s storage facility. According to Reuters, up to $1 billion worth of RMG will initially be available for issuance.
“We believe these features, coupled with the guarantee of zero ongoing annual management fees and free storage, represents one of the best and cost-effective ways to invest in physical gold today. At any time RMG can be redeemed for physical gold bars and coins produced by The Royal Mint, with physical delivery.”
Over the last couple years, numerous industries have become aware of the advantages of blockchain technology. However, the tech has been especially gainful for financial services. As an enabler of cost reductions, transparency, and immutability, a fair amount of firms within the newly coined “fintech industry” have developed blockchain-based solutions for the tracking of marketable items like commodities, assets, and securities. CME Group’s collaboration with the 1,100-year-old government body breaks barriers in the fintech sector by being one of the first of its kind.
"This is the first digital gold product that is institutionally targeted - and the first to work with a government entity - to be currently in a live testing state,” said Sandra Ro, head of digitization at CME Group. “An RMG is a digital representation of real gold sitting in the Royal Mint vaults.”