Testing has begun on a blockchain-based gold trading platform backed by the UK’s Royal Mint.

First announced in November of last year, the initiative sees the 1,000-year-old institution – which creates and issues physical coins, among other items – developing a so-called “Royal Mint Gold” digital asset, each unit of which will represent 1 gram of gold held by the Mint. The Mint is working with bitcoin startup BitGo and white-label exchange software provider AlphaPoint to develop the market, with a planned launch eyed for later this year.

According to CME Group, which is also involved in the project, a number of as-yet-undisclosed financial institutions are also involved in the development and testing of the platform. The firm said that as much as $1bn worth of gold will be digitally represented using the blockchain being developed in partnership with BitGo, as detailed in a blog post published earlier this week.

Sandra Ro, head of digitization at CME, said in a statement:

“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.”

The Royal Mint will be responsible for issuing on-chain assets and maintaining the gold reserves. Rules regarding transactions and block creation will be verified and enforced by a community of validators which will include exchange customers, academic and public institutions, as well as corporate partners. Meanwhile, transactions will be verified by a peer-to-peer network of nodes. Wallets tied to the system will utilize multi-signature security protocols.

When the project was unveiled last year, Royal Mint chief finance officer Vin Wijeratne positioned it as a way to improve the ways in which gold is traded.

“Developing a trading platform with CME Group will satisfy customer demands for faster, cost effective and secure ways to buy, hold and sell gold and complement our existing product,” Wijeratne said at the time. “This landmark partnership allows us to combine the world’s leading mint, the best futures trading platform globally and best in class technology.”

Mint coin via Shutterstock