One of the UK’s oldest bullion producers and the entity that strikes British coins, the Royal Mint has justannounced a gold-backed blockchain effort. In partnership with one of the world’s largest options and futures firm CME Group, the two companies aim to release its blockchain project in 2017.
1,000 Year Old Royal Mint to Create Blockchain-Based Gold Assets
The 1,000-year-old Royal Mint is a well-known organization dealing with manufacturing coinage and selling precious metals. In an announcement made on November 29, the two firms will collaborate on a digital gold asset called Royal Mint Gold (RMG). CME Group and the Royal Mint claim RMG will transform the gold trading and settlement markets.
The new platform will be designed by the futures firm CME Group and hopes to launch sometime in 2017. RMG will be based on a blockchain platform that records digital ownership of bullion stored in the Royal Mint’s secure storage vaults. The distributed ledger will provide a cryptographically secure landscape for buying, holding and trading spot gold.
“The Royal Mint has a unique history and a trusted reputation earned over many centuries trading in gold, but until now, there hasn’t been a way to digitally trade physical gold.” Vin Wijeratne, CFO of The Royal Mint, explained. “Developing a trading platform with CME Group will satisfy customer demands for faster, cost-effective and secure ways to buy, hold and sell gold and complement our existing products. This landmark partnership allows us to combine the world’s leading mint, the best futures trading platform globally and best in class technology.”
$1bn Worth of Gold Bullion & Ownership Without Storage Fees
The Royal Mint’s Director of New Business, David Janczewski detailed that innovative blockchain protocols are a “game changer” and a digital gold product has been on the company’s to-do list for quite some time. Partnering with the American-based futures exchange CME Group brought the idea to life, explained Janczewski.
“We’re now inviting the wider market to participate in this project alongside us and CME Group, and we look forward to engaging with interested parties in the days ahead,” he stated. “Participation will enable us to develop the platforms to be able to connect to the CME network and trade gold.”
The companies reveal that RMG may be funded with up to $1bn worth of gold bullion. CME Group will launch the digital gold platform and operate trading 24 hours a day. Furthermore, traditional costs associated with management and storage fees will be nonexistent. The Royal Mint details that if there is significant demand for the RMG product, the firm will issue more in the future.
Gold-Backed Blockchain Projects on the Rise
The Royal Mint blockchain product will not be the only gold-backed distributed ledger offering available, as others are working on similar offerings. For instance, DigixDAO is another gold based blockchain platform based on the Ethereum network. Digix tokens represent 1g of gold and are divisible by 0.0001g, and through the Ethereum framework, the system is decentralized.
Another project involving gold and blockchain technology is being produced by the fintech startups Paxos and Euroclear. The blockchain gold post-trade settlement platform, aims to operate within the London Bullion Market. The project Bankchain was revealed during the SIBOS annual conference in Geneva as the “first concrete blockchain use case for gold settlement.”
CME and the Royal Mint seem optimistic about the gold-based blockchain development. “Innovation is at the heart of CME Group’s business, and the work we have done on RMG with The Royal Mint is testament to CME Group’s progress on the application of digital assets and distributed ledger technology to financial markets. By collaborating with The Royal Mint, we have set a new milestone in the digitization of value,” said Sandra Ro, Digitization Lead at CME Group.
What do you think about the Royal Mint teaming up with CME Group to create a gold-backed distributed ledger system?