CME Group, the world’s largest gold futures exchange in North America via COMEX, is at its final stage of blockchain testing which will allow investors to trade gold on a platform inspired by Bitcoin. In collaboration with the U.K.’s Royal Mint, CME Group plans to launch a distributed ledger-based gold exchange for the public market toward the end of 2017.
Royal Mint is a government ministry of the U.K. permitted to produce gold coins. Operated by Her Majesty’s Treasury, Royal Mint is under an exclusive contract to supply all of the U.K.’s coinage.
Structurally and conceptually, the joint blockchain initiative of CME Group and Royal Mint is similar to Digital Currency Group’s Bitcoin Investment Trust. Using its blockchain platform, Royal Mint will introduce a crypto asset called RMG, which stands for Royal Mint Gold. Each RMG token will be equivalent to one gram of gold secured in the vault and gold reserve of Royal Mint.
Bitcoin Investment Trust of Grayscale, a subsidiary of Digital Currency Group, operates like Royal Mint’s RMG in the sense that each share of Bitcoin Investment Trust in the OTCQX market represents one tenth of bitcoin.
With the use of blockchain technology, Royal Mint will offer up to $1 billion of its gold reserve secured in its vault in the form of RMG tokens. Traders or investors who are willing to purchase gold from Royal Mint can acquire RMG tokens through Royal Mint and CME Group’s blockchain-based gold exchange.
According to Igor Telyatnikov, president and CEO of AlphaPoint (a blockchain solutions provider which is in charge of developing the gold exchange with multi-signature technology and blockchain firm BitGo), the utilization of blockchain technology as the base platform of Royal Mint’s exchange will allow traders and investors to track their ownership of the government-funded company’s gold reserve