The Royal Mint, a 1000-year-old institution owned by HM Treasury, is partnering with CME Group to create a digital gold product that will be stored and recorded on a blockchain.
Launching in 2017, the initiative will see The Royal Mint issue the new commodity, dubbed Royal Mint Gold (RMG), as a digital record of ownership for the previous metal stored at its on-site bullion vault storage facility. CME Group has been contracted to develop, implement and operate the product’s digital trading platform.
David Janczewski, director of new business at The Royal Mint says: “Distributed ledger technology is a game changer and supplying gold on a blockchain has been on our minds for some time. 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."
Unlike the traditional physical spot cost model for investing in gold with management fees and ongoing storage charges levied, RMGs will offer ownership of the underlying gold with the option for conversion to physical gold by The Royal Mint with zero storage cost.
The initial amount of RMG at launch could be up to $1 billion worth of gold. It will be offered through investment providers. Further RMG will then be issued based on market demand.
Julie Winkler, senior managing director, research, product development and index services at CME Group says the new digital trading platform will operate 24 hours a day, 365 days a year.
“Developing a digital gold trading platform will help ensure that CME Group’s current product offerings meet the evolving needs of the global marketplace," she says. "As we continue to expand our global footprint and develop new products, this platform will help set standards for digital assets in financial markets.”