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LBMA members back tokenised gold but seek legal certainty and safeguards - Finance news and analysis from Global Banking & Finance Review
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LBMA members back tokenised gold but seek legal certainty and safeguards

Published by Global Banking & Finance Review

Posted on October 29, 2026

2 min read

· Last updated: October 29, 2026

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LBMA Members Back Tokenised Gold, Emphasise Legal Certainty and Safeguards

LBMA Consultation Reveals Opportunities and Concerns Around Tokenised Gold

Industry Support and Key Considerations

LONDON, Oct 29 (Reuters) - Members of the London Bullion Market Association broadly support exploring tokenised gold, particularly as a way to improve collateral efficiency, but add that any rollout must preserve confidence in the underlying physical metal, avoid fragmenting market liquidity and provide legal and regulatory certainty.

Consultation Insights

• In a response to a consultation by Britain's financial regulator on the use of tokenisation in precious metals markets, the LBMA said its members differed on the scale of the opportunity, pace of adoption and where tokenisation could add most value

Potential Advantages Identified by Banks and Market Participants

• Banks and wholesale market participants saw potential advantages in improved mobility of allocated gold, easier use of bullion as collateral and delivery-versus-payment settlement against tokenised cash

Cautious Views and Market Efficiency

• However, several members argued that the existing market already operates efficiently and that tokenisation's strongest use case may be in making gold more usable as collateral rather than changing the way it is traded

Risks and Safeguards

• More cautious respondents warned against any changes that could undermine confidence in physical gold or affect market liquidity or the functioning of the wider precious-metals market

Market Structure and Regulatory Needs

• The Loco London market, the world's largest over-the-counter gold trading hub, trades $200 billion of bullion a day on average.  The LBMA maintains the Good Delivery List of refineries, whose gold or silver bars are eligible for settlement in the London market

• Common themes among LBMA members on the topic of tokenisation included the need to avoid unintended fragmentation, legal certainty around ownership and insolvency, as well as clarity on collateral treatment

Reporting Credits

(Reporting by Polina Devitt;Editing by Kirsten Donovan)

Key Takeaways

  • Tokenised gold could enhance collateral mobility and efficiency—especially in central clearing and delivery-versus-payment setups—while leveraging the strength of London’s wholesale gold market.
  • Members emphasize maintaining confidence in allocated physical gold and avoiding fragmentation of liquidity across tokenised platforms or instruments.
  • Secure adoption hinges on legal and regulatory certainty—covering ownership, insolvency, smart contracts—and clarity on regulatory treatment and prudential eligibility of token structures.

Frequently Asked Questions

Why do LBMA members support tokenised gold?
LBMA members see tokenised gold as a way to improve collateral efficiency and settlement processes.
What concerns do LBMA members have about tokenised gold?
Members are concerned about maintaining confidence in physical gold, avoiding market fragmentation, and ensuring legal certainty.
How might tokenised gold improve the gold market?
Tokenisation could make gold more usable as collateral and simplify delivery-versus-payment settlement.
Where is the largest over-the-counter gold trading hub?
The world's largest over-the-counter gold trading hub is the Loco London market.
What legal issues matter to LBMA members regarding tokenisation?
Legal certainty around ownership, insolvency, and collateral treatment is vital to LBMA members.

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