4 Minutes
WGC proposes tokenized bullion to modernize London’s gold trading
The World Gold Council (WGC) has put forward a proposal to introduce tokenized, physically backed gold into London’s deep bullion market — a move that could reshape how investors trade, use and collateralize the precious metal. The scheme would issue Pooled Gold Interest (PGI) tokens representing legally enforceable claims on physical bars stored in London vaults, enabling fractional ownership and easier mobility of gold within the global financial system.
What PGI tokens mean for market access
PGIs are designed to sit between existing allocated and unallocated settlement models. Allocated gold grants ownership of specific bars, while unallocated gold provides a claim on a pool and exposes holders to counterparty credit risk. PGIs would give holders a digital, legally backed entitlement to specific vaulted gold without the friction of moving physical bars — allowing traders to buy fractions of the standard 400-ounce bars for the first time.
Use cases: investment, collateral and beyond
Mike Oswin, the WGC’s global head of market structure and innovation, says the primary aim is to make gold easier to use as financial collateral. Although allocated gold is accepted as collateral, logistics often prevent its practical use. Digitally native PGIs could make pledging gold as simple as pledging cash or bonds, expanding the metal’s role across lending, derivatives and institutional finance.
Could tokenized gold expand into futures and settlement?
While the WGC’s immediate focus is collateralization, the organization sees broader potential. If PGIs circulate freely as collateral across market participants, they could, in time, serve as settlement instruments for futures contracts or be integrated into other trading infrastructures. Oswin notes this isn’t the core objective today, but it’s a plausible next step as tokenized bullion gains liquidity and acceptance.
Scale and ambition: from London to global markets
London’s Loco market currently accounts for 8,776 tonnes of gold — roughly $927.5 billion as of June 30 — and clears an average 20 million ounces daily. The WGC has initially scoped the PGI framework around the U.K. market but intends the model to be portable to other jurisdictions, including the U.S., if legal and regulatory frameworks align.
Industry reactions and risks
Proponents argue tokenized gold can improve market participation, create new product innovation, and reduce frictions that have historically limited gold’s use as collateral. Critics, however, worry that digital wrappers could dilute the appeal of physical bullion for traditional "gold bugs" who value simplicity and tangibility. There are also considerations around legal enforceability, custody standards, and counterparty risk — areas the WGC’s white paper seeks to address with clear governance and legal entitlement frameworks.
Why this matters for crypto and financial markets
Tokenized gold sits at the crossroads of crypto-native tooling and traditional finance. By combining the tangible store-of-value properties of bullion with blockchain-enabled transferability and fractionalization, PGIs could spur new stablecoin models, collateralized lending, and token-based investment products. For traders, asset managers and DeFi platforms exploring tokenized assets, the WGC’s proposal is a significant step toward mainstreaming tokenized precious metals.
As geopolitics and market volatility continue to drive interest in gold, the WGC’s PGI initiative could be the catalyst that brings digital gold into day-to-day market use — provided legal frameworks, custody practices and market participants adopt the new model.
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