The Royal Mint, the world's leading export mint owned by HM Treasury, and CME Group, a leading and most diverse derivatives marketplace, have collaborated to build and launch a digitised gold offering on blockchain called Royal Mint Gold (RMG), aiming to transform the way market participants can trade gold.

Launching in 2017, RMG will change the way traders and investors trade, execute and settle gold. The Royal Mint will issue RMG as a blockchain-based digital record of ownership for gold stored at its highly-secure on-site bullion vault storage facility, while CME Group will develop, implement and operate the product's digital trading platform which will see gold traded on an exchange using blockchain technology.  Taken together, this new service will provide an easier, cost-effective and cryptographically secure alternative to buying, holding and trading spot gold. 

"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”, David Janczewski, Director of New Business at The Royal Mint said. "We're now inviting the wider market to participate in this project alongside us and CME Group and we look forward to engaging with interested parties in the days ahead.  Participation will enable us to develop the platforms to be able to connect to the CME network and trade gold."

According to the official release, CME Group will launch a digital trading platform which will operate 24 hours a day, 365 days a year. While management fees and ongoing storage charges are levied in the traditional physical spot cost model for investing in gold, RMGs will offer ownership of the underlying gold with the option for conversion to physical gold by The Royal Mint with zero storage cost.

"Developing a digital gold trading platform will help ensure that CME Group's current product offerings meet the evolving needs of the global marketplace. As we continue to expand our global footprint and develop new products, this platform will help set standards for digital assets in financial markets”, Julie Winkler, Senior Managing Director, Research, Product Development and Index Services at CME Group said.

The initial amount of RMG at launch could be up to $1 billion worth of gold, which will be offered through investment providers, the release said. Further RMG will then be issued based on market demand.