The Royal Mint and CME Group have started live testing of Royal Mint Gold (RMG), a blockchain-based product that lets traders buy and sell physical gold with lower costs and greater convenience. Insti
The Royal Mint and CME Group have started live testing of Royal Mint Gold (RMG), a blockchain-based product that lets traders buy and sell physical gold with lower costs and greater convenience. Institutional traders are testing the CME platform, which was built by AlphaPoint. This represents the first institutional trading platform for digital gold.
Vin Wijeratne, the Royal Mint's CFO, called blockchain technology "a game changer." The organization had been seeking an opportunity to put gold on a blockchain, he 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," Wijeratne said. "This landmark partnership allows us to combine the world's leading mint, the best commodities futures trading platform globally and best in class technology."
Each RMG token represents full ownership of 1 gram of physical gold stored in the Royal Mint's vaults. On the platform, investors and traders can move RMGs through their digital wallets and redeem them for physical gold bars and coins that the Royal Mint will deliver. The Royal Mint plans to back the product with up to $1 billion in gold bullion when it launches later this year.
CME Group handles the design and operation of the RMG platform. The group brought in blockchain startup AlphaPoint to build the trading system and worked with BitGo, which developed the underlying blockchain code, to establish the platform's architecture, rules and parameters.
Sandra Ro leads digitization efforts at CME Group. She sees the platform as enabling an entirely new market for gold trading, one that offers speed, security and transparent direct ownership.
CME Group is releasing some of the code as open source, Ro explained, though the network remains closed initially. "We are open sourcing elements of it but we don't want to give the illusion that this is an open network. It's not initially," Ro said. "It's a permissioned private network, and we're going to be allowing for some of the source code – which is based on Bitcoin anyway and which is already open source – to be enhanced and modified."
Market makers have responded well to the system so far. A diverse group is testing the platform. "For us to have that diversity of client base is going to be important," Ro said. "What we need are people who are not only going to buy and hold RMGs from a long-term perspective, but we also need people who are going to help the secondary market grow."
