In November The Royal Mint, a 1,000-year-old institution owned by UK Treasury, and derivatives marketplace CME Group, announced a collaboration to build and launch a digital gold offering called Royal Mint Gold (RMG). Now, the first implementation steps have been announced.
The current plan is to launch the product backed by up to $US1 billion in gold bullion. CME Group is responsible for developing and operating the RMG digital platform, which is expected to provide a fast, cost-effective and cryptographically secure method of buying, holding and trading spot gold.
“An RMG is a digital representation of real gold sitting in the Royal Mint vaults,” said Sandra Ro, head of digitization at CME Group. “When you purchase RMGs you will effectively have real gold that is allocated from a direct ownership standpoint that is completely reserved – there is no re-hypothecation, there is no lending on that gold, there will be enough physical gold to represent all the RMGs that are issued.”
According to Ro, the new blockchain-based product is an entire trading eco-system for gold, providing speed, security as well as transparency of direct ownership. “This is the first digital gold product that is institutionally targeted – and the first to work with a government entity – to be currently in a live testing state,” Ro added.
The Royal Mint and CME Group have selected BitGo to help design and build the blockchain for RMG, including a first multi-signature wallet platform for RMG.
“RMG represents a major milestone for digital assets,” said Mike Belshe, Co-Founder & CEO of BitGo. “For the first time in history, a government owned treasury, top-tier financial institutions, and technology companies have come together to innovate in a major market. Gold has never before been transparently tradable around the globe. As collaboration between blockchain solution providers and mainstream financial institutions accelerates, vast new economic opportunities will be unlocked across a range of markets.”
The open source blockchain component developed by BitGo for RMG, dubbed “Prova” (Italian for “Proof”) is now in alpha-testing and available for review by developers, cryptographers, and security researchers. The digital trading platform for RMG is based on technology from AlphaPoint.
“This trading platform will provide a high performance and secure venue to buy and sell RMGs,” said Igor Telyatnikov, President & COO of AlphaPoint, adding that blockchain technology will provide participants with a permanent immutable record of ownership and chain of ownership and custody.
The BitGo blockchain is designed for the security and digitization of a single asset: .9999 fine gold held in 100 prrcent reserve by The Royal Mint.
“Distributed ledger technology is a game changer and supplying gold on a blockchain has been something The Royal Mint has wanted to develop for some time,” said Vin Wijeratne, CFO of The Royal Mint. “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 commodities futures trading platform globally and best in class technology.”
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