FX.co ★ London weighs regulatory framework for tokenized gold

The London Bullion Market Association has formally backed the idea of tokenizing gold, pitching the initiative as a way to boost the efficiency of using physical bars as collateral, the trade body said in a response to Britain’s financial regulator.

Market views are split. Large banks and wholesalers support the innovation, arguing that “virtual” gold would be far easier to move and could enable instant delivery‑versus‑payment settlements using tokenized money. Skeptics counter that the existing system works extremely well and that digitalization risks undermining confidence in physical bullion and damaging liquidity across the precious metals market.

The LBMA management itself has taken a cautious line. Any blockchain projects must deliver full legal clarity and must not harm the reputation of real bars, the association said. The stakes are huge: daily turnover on the over-the-counter Loco London market reaches about $200 billion. The LBMA polices that flow, deciding which physical bars may be used in settlement via its strict Good Delivery List of accredited suppliers.