UK Government Suspends Royal Mint’s Digital Gold Token
Reuters reports that Britain’s Royal Mint has halted plans to launch a digital gold token after a partnership with US exchange group CME failed and the UK government vetoed a plan to have the tokens traded on a crypto exchange. The project, titled Royal Mint Gold (RMG), comes to a frustrating end, given that it could have had ground-breaking potential for the future of cryptocurrency.
As it stands, the failed project serves as another example of government’s resistance to get involved in the world of crypto. This would have been the first time a government of a developed economy had become directly involved with a cryptocurrency exchange, analysts and traders told Reuters.
The Royal Mint’s Plans for a Digital Gold Token
The Royal Mint had first unveiled plans to issue tokens worth up to $1 billion on a blockchain-based trading platform run by CME in 2016. The 1,100-year old institution said that the token would serve as a means for investors to easily buy and trade physical gold in vaulted storage.
Sources told Reuters that the token was scheduled to launch in autumn of 2017, but CME’s decision to pull out left the Mint without a trading venue.
“CME’s management changed, and they walked away, didn’t want to get involved,” one source told Reuters.
The Mint attempted to save the project by partnering with a cryptocurrency exchange, but Britain’s finance ministry refused to permit it in early 2018. According to the finance ministry, a partnership with a cryptocurrency exchange would put the reputation of the Royal Mint and the government at risk.
“Sadly, due to market conditions this did not prove possible at this time, but we will revisit this if and when market conditions are right,” the Mint said.
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The CME reported that it was “continuing to assess client demand with our partner and [had] nothing new to report at this time.”
Cryptocurrency exchanges continue to be unregulated in the UK. There are efforts in place by the finance ministry to perhaps work towards establishing rules and guidelines to protect investors. Reuters cites the continued concerns of governments worldwide over price volatility, exchange hacks, money laundering, and terrorist financing in the digital money market.
The intention for Royal Mint Gold was to act in a similar function to the increasingly popular stable coins class of digital tokens. Stable coins work by keeping their value pegged at a 1:1 ratio with some form of collateral, thereby acting as a defense against the volatility crypto investors typically encounter with mainstream tokens like Bitcoin. Since gold, like crypto, is considered an alternative value storage medium to traditional fiat, a token like RMG could have potentially had wide-ranging appeal.
Elsewhere in the world, Australia’s Perth Mint and the Royal Canadian Mint have gotten involved in the launch of digital gold products using technology supplied by fintech startups. However, it is not known how much gold has been bought through these platforms.
CME was one of the first companies to launch Bitcoin futures trading last year, and Reuters reports it has invested in digital technology startups through venture arms. CME’s priorities are reported to have shifted when CEO Phupinder Gill and head of digitization Sandra Ro left the company between 2016 and 2017.
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