Britain’s Royal Mint has frozen plans to launch a digital gold token after a partnership with U.S. exchange group CME failed and the government vetoed a plan to have the tokens trade on a cryptocurrency exchange, three sources told Reuters.
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 cyptocurrencies, which 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 $1 billion on a blockchain-based trading platform run by CME in 2016, saying they would 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 cryptocurrency exchange, Britain’s finance ministry in early 2018 refused to permit it, seeing the union as too big a gamble with the reputation of the government and the Mint, the sources added. The Mint is 100 percent 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 Reuters’ 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 and the risk that digital currencies could be used to launder money or finance terrorism.
In Britain cryptocurrency exchanges remain unregulated. Its finance ministry, central bank and financial watchdog are looking at whether rules are needed for cryptocurrencies and the use of blockchain technology in finance.