LBMA members back tokenised gold push, seek safeguards for London bullion market

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LBMA backs tokenised gold

Highlights

LBMA members broadly support exploring tokenisation in precious metals, focusing on collateral management applications rather than fundamentally changing gold trading.
Respondents caution that tokenisation could undermine confidence, disrupt liquidity, or fragment the $200 billion-per-day London bullion market without robust legal safeguards.
LBMA stresses the need for certainty around ownership, insolvency, and collateral to preserve the integrity of the Loco London gold trading hub and its Good Delivery system.

Consultation response highlights support and limits

As reported by Reuters, the London Bullion Market Association says in its response to a consultation by Britain's financial regulator that members broadly support exploring tokenisation in precious metals markets, although views differ on the scale of the opportunity, the pace of adoption and where the technology could add the most value.

Banks and wholesale market participants see potential benefits in improved mobility of allocated gold, easier use of bullion as collateral, and delivery-versus-payment settlement against tokenised cash. Several members, however, argue the existing market already works efficiently, suggesting tokenisation's strongest use case may be in collateral management rather than in reshaping how gold is traded.

Liquidity and legal clarity remain central concerns

More cautious respondents warn against changes that could weaken confidence in physical gold, disrupt liquidity or affect the functioning of the wider precious-metals market. Common themes among LBMA members include the need to avoid unintended fragmentation and to provide legal certainty around ownership, insolvency and collateral treatment.

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

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