Britain’s Royal Mint has frozen plans to launch a digital gold token after a partnership with U.S. exchange group CME failed.
The government vetoed a plan to have the tokens trade on a crypto currency exchange, three sources told the Media.
The demise of the potentially ground-breaking project, named Royal Mint Gold (RMG), highlights the wariness of governments to become involved in the largely unregulated world of cypto currencies.
Cypto currencies exploded into the public eye last year with the stellar rise of bitcoin.
As other mints and fintech startups race to set up similar products, it could squander the chances of Britain’s Mint leading the field to build gold into a multi-billion dollar digital asset class.
It also reflects a cooling of enthusiasm toward digital assets at the CME, three sources said.
The project would have been the first time a government of a developed economy had become directly involved with a crypto currency exchange, analysts and traders said.
The 1,100-year old Mint announced its plan to issue tokens worth up to one billion dollars on a block chain-based trading platform.
The platform was manned by CME in 2016, which will give investors an easy way to buy and trade physical gold held in its vaults.
Royal Mint Gold was to launch in the autumn of 2017, but CME decided at the last minute to pull out, leaving the Mint without a trading venue, sources said.
“CME’s management changed, and they walked away, didn’t want to get involved,” one of the sources said.
When a blindsided Mint sought to save the project by partnering with a crypto currency exchange, Britain’s finance ministry in early 2018 refused to permit it.
It refused to permit seeing the union as too big a gamble with the reputation of the government and the Mint, the sources added.
The Mint is 100 per cent owned by the government.
Asked for comment, the Mint said its digital gold had been due to launch in spring this year.
“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,” it said.
A Treasury spokesman referred the media’ questions to the Mint. CME said it was “continuing to assess client demand with our partner and have nothing new to report at this time.”
Governments are wary of cryptocurrencies, and few international standards have emerged to tame extreme price volatility, regular thefts from exchanges.
But CME’s priorities shifted after CEO Phupinder Gill retired in late 2016 and Sandra Ro, CME’s head of digitisation, left in July 2017, sources said.
“There was a change in strategy,” said one source, adding that digitisation was de-emphasised.
Asked to comment, CME said: “It is not correct to say we have ‘de-emphasised’ digitisation and remain committed to pursuing our digitisation strategy.”
The government vetoed the plan to trade Royal Mint Gold on a crypto exchange.
Following the vetting the Mint’s new chief executive Anne Jessop, appointed in February 2018, decided to shut the project down, sources said.
Meanwhile, others are launching rival products.
Australia’s Perth Mint and the Royal Canadian Mint are involved with digital gold products that launched this year and trade using technology supplied by fintech startups.
Both mints declined to say how much gold had been bought through these platforms.
Gold-backed crypto currencies have also proliferated, though none has yet achieved the success of cryptos such as bitcoin, Etherium and Ripple, which have attracted hundreds of billions of dollars in investment.