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Three sources told Reuters that the government vetoed a plan to have the tokens trade on a cryptocurrency exchange and that the Royal Mint of Britain has suspended plans to launch a digital gold token following the failure of a partnership with the U.S. exchange group CME.
The failure of the potentially ground-breaking endeavor known as Royal Mint Gold (RMG) demonstrates the governments’ apprehension about getting involved in the largely unregulated world of cryptocurrencies, which gained prominence last year thanks to Bitcoin’s meteoric rise.
It could jeopardize Britain’s Mint’s chances of making gold a multi-billion-dollar digital asset class as other mints and fintech startups rush to launch similar products.
According to three sources, it also reflects a waning enthusiasm for digital assets at the CME.
Analysts and traders stated that the undertaking would have marked the first time a government of a developed economy had become directly involved with a cryptocurrency exchange.
The 1,100-year-old Mint declared its arrangement to give tokens worth up to US$1 billion on a blockchain-based exchanging stage run by CME in 2016. It said it would provide financial backers a simple method for purchasing and exchanging actual gold held in its vaults.
According to one of the sources, “CME’s management changed, and they walked away, didn’t want to get involved.”
The sources added that Britain’s finance ministry rejected a blindsided Mint’s attempt to save the project by forming a partnership with a cryptocurrency exchange at the beginning of 2018 because it considered the union an excessive risk to the government and Mint’s reputation.
The government owns the Mint wholly.
When asked for clarification, the Mint stated that its digital gold would be available in spring. It said, “Sadly, due to market conditions, this was not possible at this time; however, we will revisit this when market conditions are favorable.”
Reuters’ inquiries were referred to the Mint by a Treasury spokesperson. “Continuing to assess client demand with our partner and have nothing new to report at this time,” CME stated.
Few international standards have emerged to control the extreme price volatility, frequent thefts from exchanges, and the possibility that digital currencies could be used to launder money or finance terrorism. Governments are wary of cryptocurrencies.
Cryptocurrency exchanges are still unregulated in Britain. Its finance ministry, central bank, and financial watchdog are determining whether cryptocurrency use and blockchain technology in finance require regulations.
