The London Bullion Market Association says its members support exploring tokenised gold, with a focus on better collateral efficiency. Members differ on the size of the opportunity and the speed of adoption, and the group sets conditions for any rollout.
The London Bullion Market Association (LBMA) backs exploring tokenised gold, with a focus on improving collateral efficiency. The trade group made the point in its response to a consultation by Britain's financial regulator on tokenisation in precious metals markets.
Members hold different views on the opportunity
The LBMA said its members held different views on the size of the opportunity, the speed of adoption and where tokenisation could deliver the most value. Banks and wholesale market participants pointed to potential benefits in better mobility of allocated gold, simpler use of bullion as collateral and delivery-versus-payment settlement against tokenised cash.
Several members, however, said the current market already functions well. They said tokenisation's main benefit may lie in making gold more useful as collateral rather than changing trading practices.
Conditions for any rollout
Some respondents also raised concerns about changes that could weaken confidence in physical gold or affect market liquidity and the broader precious-metals market. The LBMA said any implementation must maintain confidence in the underlying physical metal, prevent market liquidity fragmentation and ensure legal and regulatory clarity.
The Loco London market handles $200 billion of bullion trades daily on average, making it the world's largest over-the-counter gold trading hub.
Source: Investing.com
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