American financial market company CME Group has collaborated with Britain’s The Royal Mint and have begun testing a blockchain platform for gold trading, Reuters reported.

The announcement said that CME Group’s new blockchain platform is built with technology companies AlphaPoint and BitGo. It also stated that the platform as being tested by a select group of major financial institutions, and is on schedule for launch this year.

“This is the first digital gold product that is institutionally targeted - and the first to work with a government entity - to be currently in a live testing state,” Sandra Ro, head of digitization at CME Group said, as reported by Reuters. “An RMG is a digital representation of real gold sitting in the Royal Mint vaults.”

The new blockchain platform for trading gold will permit institutions to trade "Royal Mint Gold," or RMG, a new digital token issued by the Royal Mint, which makes Britain's coins. These tokens represent the digitized version of 1 gram of gold stored in the Royal Mint's vault. Royal Mint will initially issue up to $1 billion worth of RMGs.

The transactions will be recorded on the blockchain that will prove the transparency and security of the system.

“There is a higher level of traceability and audit that comes with blockchain technology because participants are provided with a permanent, immutable record of ownership and chain of ownership and custody,” Igor Telyatnikov, president and chief operating officer of AlphaPoint, stated.

Blockchain has been applied across gold trade and settlement services. Last October, blockchain company Paxos and big four firm EY collaborated to develop blockchain solutions for gold market. The companies partnered for the rollout of a next-generation blockchain settlement service that brings instant settlement and true DvP (Delivery versus Payment) to the gold market for the first time.