LBMA members open to tokenised gold, but want legal clarity and safeguards

what happened

According to Reuters, members of the London Bullion Market Association generally welcome testing tokenised gold, mainly as a way to make bullion easier to use as collateral. In their reply to a consultation run by the UK financial regulator, they stress that any launch must not weaken trust in the physical metal, split liquidity across venues, and must rest on clear legal and regulatory foundations. Opinions differ on how large the benefit could be and how fast adoption would come.

Banks and wholesale participants see gains in easier transfer of allocated gold, use of bars as collateral, and delivery-versus-payment settlement against tokenised cash. Others argue the current system already works efficiently and that the main gain may come from collateral use rather than from changing trading itself. Cautious respondents oppose any change that could erode confidence or market depth. The LBMA also notes that Loco London, the largest over-the-counter gold hub, trades about $200 billion of bullion a day on average, and that it maintains the Good Delivery List of refiners whose bars are eligible for London settlement.

why it matters

For gold traders, the debate concerns market structure more than near-term supply. Any change in how bullion is held or pledged could affect liquidity and collateral flows in London, where much of the physical trade is concentrated. This is input to a consultation rather than a new rule, so conditions in the market are not changing yet.

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