U.S.-based derivatives exchange CME Group today announced it is in the final stages of testing a blockchain-based digital platform for dealing in gold. CME Group has partnered with the UK government-owned Royal Mint to facilitate the transfer of ownership of digital gold using blockchain, the technology that underpins Bitcoin.
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The platform will see Britain’s Royal Mint, which is permitted to strike British coins, issue a product dubbed “Royal Mint Gold”, or RMG which then will be traded via the platform run by the CME Group. One RMG will equate to one gram of gold. In addition, Royal Mint will put gold bars into its secure vaults, the equivalent amount of so-called digitised gold will be created, with ownership to be assigned on the blockchain.
The digitised product makes investing in the commodity easier and cheaper, specifically for pension funds and other institutional traders which will be able to buy and sell gold using a trading platform that will run 24 hours a day.
More digital RMG can be issued depending on market demand, with CME and Royal Mint expecting to issue up to $1 billion worth of gold at launch. Royal Mint and the CME Group say the innovative new product strips away management fees and ongoing storage charges that are usually levied for traditional spot gold holdings. RMG holders will have the option to converting their digital records into physical gold with no storage costs.