LONDON Nov 29 Britain's Royal Mint and leading
U.S.-based derivatives exchange CME Group have teamed up
to create a blockchain-based digital platform for dealing in
gold in a drive to cut the costs involved in trading the
The platform, due to launch in 2017, will see the Royal Mint
- the Treasury-owned body that is permitted to strike British
coins - issue "Royal Mint Gold", or RMG. This will be traded via
a platform created and run by the CME Group.
The Royal Mint will put gold bars into its on-site secure
vault, which will then be digitised to create RMGs whose
ownership will be recorded on the blockchain. Traders will then
be able to trade in and out of RMGs between themselves.
Blockchain - or distributed ledger - technology keeps track
of and authenticates a continuously growing list of transaction
data, which is secured by a global network of computers and is
virtually impossible to be tampered with or revised.
Blockchain first emerged as the technology underpinning
digital currencies such as bitcoin, but is now being adapted for
use in more traditional financial tasks.
One RMG will represent one gramme of gold, which is
currently worth around $42.
"While things have improved in terms of gold trading over
the centuries, it's our view that it still remains difficult and
relatively expensive as a commodity to invest in ... Gold is
known in the industry as a negative-return investment," said
David Janczewski, director of new business for the Royal Mint.
"What we're trying to do with the announcement of Royal Mint
Gold - or RMG - is to really address this issue and offer a
better way to invest in solid digital gold."
The platform will operate 24 hours a day, 365 days a year.
Unlike the traditional model for investing in gold, with
management fees and storage charges, RMGs will offer ownership
of the underlying gold with the option for conversion to
physical gold by the Royal Mint at zero storage cost.
The Royal Mint said it would issue up to $1 billion worth of
RMGs initially, with more added later, subject to demand. It
will be offered through both retail and institutional investment
"We spent the greater part of this year with the Royal Mint
working through the fact they wanted to launch a digital gold
product and looking at all the available technologies that were
out there. This is not about just applying blockchain just
because it is blockchain," said Sandra Ro, executive director of
digitisation at CME Group.
"This is about looking for what the best delivery mechanism
is that could also help us to scale at a global level over
(Reporting by Jemima Kelly; Editing by Gareth Jones)