The Royal Mint, the body responsible for producing physical coins for circulation in the United Kingdom, and derivatives exchange CME Group have announced the launch of Royal Mint Gold (RMG), a digitized gold offering to be recorded on Blockchain technology.
Launching in 2017, RMG will offer a digital record of ownership of up to £1 bln worth of gold held at The Royal Mint’s bullion vault. The aim is to provide an easier and more affordable way to hold the precious metal rather than spot trading, with the added bonus of cryptographic security.
David Janczewski, director of new business at The Royal Mint, explains:
“Distributed ledger technology is a game changer and supplying gold on a Blockchain has been on our minds for some time. But only after partnering with CME Group did we feel we had the right fit and proposition.”
CME Group will manage the trading platform handling transactions in the digital asset, which will be open all year around. Investors will have a full claim on the underlying commodity, meaning they’ll have the option of converting the digital holding into physical gold.
A particular advantage of a digital holding, although not exclusive to RMGs, is that investors don’t need to worry about the cost and inconvenience of storing gold. Spot traders have to pay management and storage fees whereas holders of RMGs will not have to pay these charges.
“Innovation is at the heart of CME Group’s business, and the work we have done on RMG with The Royal Mint is a 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.
The initial offering will be made available through investment providers, and The Royal Mint claims further RMG may be issued subject to demand.