In 2016, the Royal Mint announced the launch of a digitised token for trading gold called RMG (Royal Mint Gold). Each token would represent one gram of physical gold in a move that was set to place the UK at the vanguard of blockchain innovation and the fledgling field of tokenised assets. It has since lost the support of its main partner, American financial market firm, CME Group, and disappeared from the agenda. So, what happened?
Earmarked for the beginning of this year, “market conditions” were deemed unsuitable for the launch of RMG and the project was shelved until further notice. However, market conditions, adverse or otherwise, have done little to stem the tokenisation of precious metals elsewhere, with similar projects in Switzerland, the US and Australia all ploughing ahead regardless.
As much as $1 billion worth of digital gold tokens were to be made available for trading on CME’s blockchain-based platform whilst the software developer BitGo was charged with building RMG a multi-signature cryptocurrency wallet. Pitched as a cutting-edge way for investors to trade the gold held in the vaults of the 1,100 year-old institution, RMG was proposed not only as a tidy revenue stream for the Mint but also as a vital bid to maintain its relevance in rapidly changing times.
The decline and fall of Royal Mint Gold began with the CME Group’s early exit from the project following a leadership reshuffle, as unnamed sources confirmed to Reuters;
“CME’s management changed, and they walked away, didn’t want to get involved,”
From there, the Mint decided to salvage the situation by enlisting a cryptocurrency exchange to facilitate RMG trading and it was at this point that the Ministry of Finance stepped in, pausing the process. Royal Mint Gold now hangs in an uncertain stasis as JP Morgan, Swiss firm Tiberius and the Perth Mint all race their own gold-backed tokens to market.
RMG was in the pipeline long before its rival stablecoins, so why was the MInt prepared to throw away such a promising lead?
Whilst the UK is often trumpeted as a world leader in fintech development, it’s regulatory authorities, specifically the FCA, have been painfully slow to adapt to the advent of cryptocurrency. Decentralised cash systems are often considered warily as tools for terrorists and criminals, their secondary markets teeming with scammers, yet little is being done to bring them in from the cold. Perhaps the most obvious explanation for this is ambivalence; the blockchains on which cryptocurrencies are built offer tremendous technological opportunity but also pose an existential threat to almost all centralised concentrations of institutional power.
It’s possible that this ambivalence has bred a level of risk aversion bordering on timidity which has, in turn, been allowed to hamper a project as seemingly promising as RMG. The cost to the British taxpayer of its government’s RMG U-turn is quantifiable but the negative effect it has on the UK’s fintech sector may prove immeasurable.