Highlights

  • The London Bullion Market Association has told a UK regulator that its members broadly support exploring tokenised gold, mainly to improve Collateral efficiency.
  • Members want any rollout to preserve confidence in physical metal, avoid fragmenting Liquidity and provide legal certainty over ownership and insolvency.
  • The response follows a Financial Conduct Authority call for input examining how tokenisation could change the way gold is traded, pledged and held.

Gold continues to occupy a central place in Australian portfolios and in the local resources sector, and changes to how the metal is traded and settled in global hubs can ripple through to producers and Market Participants watching Gold Stocks on the ASX. The latest development comes from London, the world's largest over-the-counter gold trading centre. The London Bullion Market Association, which sets standards for the wholesale market, has submitted its response to a British regulatory consultation on tokenisation in precious metals. Ing republished, LBMA members broadly back further work on tokenised gold, particularly as a way to make bullion easier to use as collateral. They have attached clear conditions, however, centred on legal certainty, market integrity and the preservation of confidence in the underlying physical metal.Gold Stocks

The FCA Call for Input on Tokenised Gold

The consultation was run by the Financial Conduct Authority, which published a call for input in September asking whether tokenisation could improve how gold is traded, transferred, pledged and held in UK markets. According to a summary from law firm Norton Rose Fulbright, the call covered wholesale collateral and settlement, consumer-facing products, the regulator's own role and policy options, and questions about whether certain tokenised products fall within existing UK fund regulation.

Among the policy Options canvassed were guidance, clarification of regulatory perimeters, and a possible dedicated category for eligible gold tokens. Submissions closed in late October, and the LBMA's response represents the collective view of its members, which include banks, refiners, traders and other wholesale participants.

Where LBMA Members See Potential Benefits

Banks and wholesale market participants identified several possible gains. These included greater mobility of allocated gold, easier use of bullion as collateral, and delivery-versus-payment settlement against tokenised cash. Such features could allow gold to move more quickly between counterparties and reduce settlement friction in financing transactions.

Several members argued, however, that the existing London market already functions efficiently. In their view, tokenisation's strongest use case may lie in making gold more usable as collateral, rather than in changing how the metal is traded day to day. The LBMA noted that members did not agree on the scale of the opportunity, the likely pace of adoption, or where tokenisation would add the most value.

Conditions Attached to Any Rollout

The LBMA said any move towards tokenised gold must preserve confidence in the underlying physical metal. Members also want to avoid unintended fragmentation of market liquidity, a concern given the depth of trading that currently runs through London.

Legal certainty emerged as a common theme. Respondents sought clarity over ownership rights and Insolvency treatment, so that holders of a token have a clear claim on the metal if an issuer or Custodian fails. They also called for clarity on how tokenised gold would be treated as collateral under existing prudential and financial rules.

London's Role in the Global Gold Market

The Loco London market handles a very large daily Volume of bullion trading and serves as the reference point for much of the global wholesale gold trade. The LBMA maintains the Good Delivery List, which identifies refineries whose gold and silver bars are eligible for settlement in London.

Because Good Delivery standards underpin the acceptance of bars around the world, any changes to settlement infrastructure in London may influence how refiners, custodians and producers interact with the wholesale market, including those in Australia. Australian refiners and miners that rely on internationally recognised bar standards would therefore have an interest in how any digital settlement layer is designed and governed.

Risks and Open Questions for Tokenisation

More cautious respondents warned against changes that could weaken confidence in physical gold, affect liquidity or disrupt the broader precious metals market. Tokenised products also raise questions about custody, redemption, fees and consumer protection, issues the FCA itself flagged in its call for input.

Interoperability between different token platforms and existing settlement systems remains unresolved, and the regulatory pathway is still being developed. Any framework is likely to require coordination between prudential, collateral and digital asset regimes.

Cautious Support for a Digital Gold Layer

The LBMA's response signals cautious support for tokenised gold, framed mainly around collateral efficiency and conditional on legal certainty, market integrity and confidence in physical bullion. For Australian readers, the discussion is relevant because London standards shape how gold produced locally is traded and settled worldwide. The regulatory process in the United Kingdom will determine how far tokenisation progresses within the established wholesale gold market.