Tokenised gold is moving beyond specialist crypto markets and into mainstream financial services. On 14 September, the UK Financial Conduct Authority began seeking industry views on whether tokenising gold could improve the way it is traded, transferred, pledged and held in UK markets.
The regulator is examining its potential in wholesale collateral, retail investment and product innovation while attempting to preserve London’s existing position as the world’s largest over-the-counter gold trading centre. The consultation remains open until 23 October. Reuters
The move follows DBS Group’s announcement that it will offer tokenised physical gold to retail customers in Singapore during the second half of 2026. Each DBS token will be backed by one gram of gold held in a dedicated bank vault, with customers able to buy small quantities, trade around the clock and redeem their tokens for physical gold. Reuters
Yet the term tokenised gold can describe several very different products. The central question is whether the investor owns gold, holds an interest in pooled reserves or simply has a contractual claim against an issuer.
London faces growing competition
Lewis Huang, Chief Market Analyst at Bitget, says the FCA’s interest reflects the need to protect London’s position as financial infrastructure becomes increasingly digital.
“The FCA’s interest in tokenised gold is less about any single competitor and more about protecting London’s position in the global gold market as ownership, settlement and distribution become increasingly digital. China is part of that competitive backdrop, alongside a more crypto-friendly US and jurisdictions such as Switzerland, Singapore and the UAE that are actively building their digital-asset markets.
“London’s position in OTC gold has historically rested on trust, custody, clearing and deep institutional liquidity. Tokenisation does not remove those advantages, but it could shift where new products are issued and where liquidity develops, particularly if other jurisdictions offer clearer regulatory frameworks.”
Huang cautions that market projections should not be mistaken for guaranteed demand or liquidity. The value of tokenised gold will depend on whether it improves the existing market.
“Tokenised gold becomes more meaningful if it can improve settlement, make collateral easier to move or broaden access to the asset. Simply putting an existing gold product onchain does not fundamentally change its economics.
“The market needs clarity around custody, reserves, redemption rights and legal ownership of the underlying gold. There is an important distinction between a fully backed token with enforceable redemption rights and a product that simply tracks the gold price or represents a claim on an issuer.”
Backed by gold does not necessarily mean owned
Marcel Thiess, CEO of crypto and fintech advisory firm Thiess Invest GmbH and a Fellow of the International Compliance Association, says ownership depends entirely on the legal structure behind the token.
“In the best case the holder owns allocated gold, meaning specific bars in a specific vault that sit outside the issuer’s estate if it goes bankrupt. In other cases the holder only has a share of a pooled reserve or a contractual claim against the issuer, which makes them an unsecured creditor.
“Products claiming they are backed by physical gold do not automatically fall into that category, because backed by and owned by are not the same thing. However, the issue with this only shows up when something goes wrong.”
Proof that gold is present in a vault is therefore only one part of the protection investors require. Thiess argues that the legal arrangements governing the reserves may be even more important than an audit.
“An audit only proves that the gold is there today. It does not tell you what happens with the gold if the custodian or issuer goes bankrupt. The gold needs to sit in a segregated, bankruptcy-remote structure, and the custody agreement needs to name the token holders as beneficial owners rather than the issuer.
“On top of that, issuers still need an independent physical audit with bar lists and serial numbers, and a regular reconciliation between tokens in circulation and bars in the vault, because a mismatch has to show up quickly and not at year end.”
If regulators decide that some tokenised gold products should sit outside conventional fund rules, Thiess says protections concerning redemption, insolvency, custody, valuation and disclosure must remain.
“The holder still needs a legal right to redeem for physical gold on defined terms, a clear answer on what happens to the gold if the issuer fails, and independent verification of the reserve.”
Documents must match physical reality
Igor Samotesov, founder of SPEC INTELLIGENCE, studies how real-world assets are verified when represented in digital systems. He says investors must be able to identify both the gold and the process used to verify it.
“When it comes to tokenised gold, the key question is whether the token is backed by a real, identifiable and verifiable physical asset. Investors must be able to see where the gold is stored, whether it is segregated or pooled, how verification is conducted, who performs the independent verification and how long ago it was conducted.
“Documents are important, but only if they still reflect physical reality. A report can be complete and yet out of date. Tokenisation can improve the efficiency of accessing and transferring assets, but it does not, in and of itself, prove that the underlying gold exists, remains in storage or still corresponds to the digital record.”
This creates an ongoing verification requirement. The digital supply of tokens must remain aligned with the physical reserves, including when gold enters or leaves the vault or when tokens are issued, transferred, redeemed or destroyed.
Collateral could be the larger opportunity
Kyle Sonlin, President and Co-Founder of Global Settlement Network, sees gold as a natural candidate for tokenisation because it is already widely understood, held by institutions and supported by an established market.
“The real question is what tokenisation allows investors and institutions to do with that gold that is difficult today.
“If I own tokenised gold, I should be able to verify what backs it, understand exactly what my legal claim is and know what happens if the issuer, custodian or platform fails. A token is not automatically equivalent to physical gold simply because an issuer says it is backed by gold. The legal ownership structure, reserve allocation and redemption rights determine what the investor actually owns.” One potentially significant use is collateral. Tokenisation could allow institutions to use gold to access liquidity without first selling the asset, waiting for settlement and moving the resulting cash. However, this depends on banks and counterparties recognising the token and being able to verify its ownership, custody and regulatory status.
Thiess expects collateral use to develop within individual financial networks before becoming widely interoperable.
“Tokenised gold that currently sits in a vault earning nothing could move as collateral within minutes instead of days, especially in securities lending, repo and derivatives margin.
“However, the market is quite fragmented. A bank on a private ledger and a counterparty on a public one cannot easily pledge the same token to each other. Therefore, I expect collateral use to grow inside individual bank networks first, and only later across them, once there is a common legal standard for what a gold token actually is.”
Sonlin also sees interoperability as essential to creating a genuinely liquid market.
“The opportunity becomes much larger when tokenised gold can move between different banks, custodians, platforms and networks. Until that interoperability exists, the market risks creating isolated digital versions of gold that are easy to trade within one platform but difficult to use anywhere else.”
A more mobile form of gold
Tokenisation does not alter the nature of gold or remove the need for vaults, insurance and enforceable ownership. Its innovation lies in making small quantities of the asset easier to buy, transfer, settle and potentially use as collateral.
“The gold, the vault, the insurance and the legal enforceability of ownership are all unchanged with tokenised gold, so in that sense it is a wrapper,” says Thiess. “However, the wrapper allows things a bar or a fund unit cannot do, because you can now own a single gram, transfer and settle in minutes at any hour, and pledge or lend the token in a financing arrangement.
“The innovation is in mobility, and this is exactly why the legal questions matter so much, because a token can now move faster than the ownership records behind it.”
Tokenised gold may offer fractional access, faster settlement and new collateral applications. Whether it is equivalent to owning gold will still depend on what sits behind the token, who controls the reserves and whether the holder’s rights survive when an issuer, custodian or platform fails.
