Part One of this series examined whether buying tokenised gold is genuinely equivalent to owning physical gold, looking at legal ownership, custody, reserve verification and the rights of investors when an issuer or platform fails. [GOLD – PART ONE]
The next question is what tokenisation materially changes. Fractional investment, continuous trading and faster settlement can make gold more accessible and useful. They can also place another platform, custodian and set of digital credentials between the investor and the underlying asset.
For institutions, tokenised gold could make dormant reserves easier to use as collateral. For retail investors, it could open access to an asset once associated with bars, coins and specialist investment products. Whether these represent the same innovation is less straightforward.
Access and efficiency are different propositions
Simon Fletcher, founder of Dida Labs, says tokenised assets are generally marketed through one of two stories: access or efficiency.
“Access is fractional ownership, 24-hour transfer and someone who could not previously hold the asset now being able to do so. That is new, and it is countable because you can measure holders who would not have qualified before.
“Efficiency is faster settlement and cleaner collateral movement. That is a wrapper, and it is sold to people who already own gold.”
The distinction matters because the same technology serves very different users. A retail buyer purchasing a small quantity of gold through a banking app is not seeking the same outcome as a treasury desk moving collateral between financial institutions.
Fletcher says the intended audience can often be identified from the way an issuer presents the product.
“The tell is who the issuer writes its homepage for. If it is written for someone who has never owned gold, it is doing something new. If it is written for a treasury desk, it is better plumbing on an old product.”
Both uses may be valuable. One broadens participation, while the other seeks to improve the movement and use of capital already held in gold. DBS’s plan to offer tokens representing physical gold to retail customers in Singapore tests the access proposition directly, allowing customers to buy small quantities and trade beyond conventional market hours.
Putting dormant gold to work
Utkarsh Ahuja, founder and managing partner at Moon Pursuit Capital, sees gold as one of the clearest candidates for tokenisation because investors already understand its place within a portfolio.
“Gold is one of the clearest assets to bring onchain because investors already understand why they own it. The opportunity is to make that exposure easier to access, trade and use without weakening the qualities that make gold valuable in the first place.”
That condition is important. Convenience has little value if the structure supporting the token leaves its holder with weaker rights than expected.
“From an investor’s perspective, I would want very clear answers on what the token legally represents, where the underlying gold sits, who controls it, how frequently the reserves are independently verified and what my rights are if an issuer or custodian fails,” says Ahuja.
Once those questions have credible answers, he believes tokenisation can improve the ownership experience through fractional access, faster settlement and trading outside traditional market hours.
Its larger opportunity may lie in releasing some of the value held in gold for use elsewhere in the financial system.
“There is already enormous value sitting in gold globally, and making ownership easier to verify, transfer and settle could allow more of that capital to be used across lending, trading and treasury activity,” says Ahuja.
Institutional adoption will depend on whether gold tokens can travel beyond the environment in which they were issued. A token that works as collateral within one platform but is not recognised by another remains limited, regardless of how quickly it can be transferred.
“For institutions, the deciding factor will be whether a token issued on one platform can be recognised and used elsewhere without introducing unnecessary custody or counterparty risk,” says Ahuja. “If the market can solve that, tokenised gold has a very credible path into institutional portfolios because it gives investors a familiar asset that can move and be put to work far more efficiently.”
When easier access becomes another vulnerability
Chris Brooks, co-founder of Crypto Asset Recovery, approaches the issue from the other end of the transaction. Since 2017, his work has involved helping people recover lost wallets and stranded digital assets. His concern is what happens when ownership exists but access fails.
“Most people think they own gold. They usually own a claim, and that distinction matters enormously. There is a real difference between holding an allocated bar in your name, owning a slice of a shared pool and holding a promise that gold exists somewhere.”
The language used to market a product may be reassuring without explaining the investor’s position during a failure. Brooks says buyers need to look beyond the statement that a token is backed by gold.
“Before you buy, find the sentence that explains what happens if the issuer disappears, because that is the one that actually counts.”
He says issuers should provide regular independent audits, explain whether the gold is individually allocated or held in a pool, and state clearly what happens if the issuer or custodian becomes insolvent.
“Segregated, bankruptcy-remote custody is what separates owning gold from being an unsecured creditor. If an issuer cannot answer that question clearly, walk away.”
Tokenisation also replaces some traditional risks with digital ones. A buyer may no longer need to store a bar, protect a paper certificate or arrange a physical transfer, but may instead depend on private keys, account credentials, platforms and custodians.
“Fractional ownership and 24-hour trading are genuine improvements,” says Brooks. “But you have swapped one set of risks, including vaults and paper certificates, for another involving keys, platforms and issuers.”
In his experience, people can lose access to digital assets because they trusted the wrong custodian or lost the credentials required to reach them. The underlying asset may continue to exist while remaining inaccessible to its supposed owner.
“If you cannot clearly answer how you would recover your gold if the platform vanished tomorrow, the digital wrapper has not made you safer. It has just made the problem faster.”
A better product with a sharper test
Tokenised gold can broaden access, reduce settlement times and allow an established store of value to participate more readily in lending, treasury and collateral markets. Those are meaningful developments, even when the underlying economics of gold remain unchanged.
The retail and institutional propositions should still be judged differently. Retail buyers need to know whether they own gold, a share of pooled reserves or a claim against a company. Institutions need assets that can move between platforms without creating fresh custody, legal or counterparty uncertainty.
In both cases, the value of tokenisation depends on more than the speed of the transaction. The decisive test is whether the investor can establish ownership, retain enforceable rights and recover access when the system around the token fails.
