The Future of Tokenized Commodities: Why Gold Leads

In recent years, the investment landscape has quietly evolved as traditional commodities step into the digital era through blockchain technology. Gold, in particular, is emerging as the frontrunner by combining its historic trust with modern transparency and programmability. Tokenized gold allows investors to own and trade verified fractions of real assets with unmatched efficiency and security. This transformation reduces settlement friction and enables near real-time liquidity across markets. 

Businesses can now integrate tokenized assets into trading, lending, or DeFi ecosystems with stronger auditability. Investors may gain faster access to global markets while maintaining on-chain asset integrity. 

Over the years, we’ve worked with several digital exchanges and gold custody firms, and built multiple tokenized asset and commodity platforms, powered by asset tokenization frameworks and smart contract automation. Drawing from that hands-on experience, we’re sharing this blog to explore the future of tokenized commodities and discuss why gold continues to lead this transformation. Let’s dive in!

Key Market Takeaways for Tokenized Gold Commodities

According to CoinLaw, the tokenized gold market has become a major force in 2025, with gold-backed tokens now valued at about $2.57 billion. This rise comes as investors seek digital access to real-world assets, especially with gold trading above $3,599 per ounce. The combination of record gold prices and blockchain’s ability to offer fractional, transparent ownership has made tokenized gold an attractive alternative for both everyday investors and institutions.

Source: CoinLaw

Tether Gold (XAUT) and PAX Gold (PAXG) dominate this space. Tether Gold has crossed the $2 billion mark, supported by more than 11.6 tons of physical gold, providing holders with a secure, easily transferable store of value. 

PAX Gold’s model, where each token is backed by one fine troy ounce of gold stored in LBMA-accredited vaults, has set a high standard for transparency and redemption, while also making it simple to integrate with DeFi platforms and global exchanges.

The market’s next phase is being shaped by partnerships that bring tokenized gold into mainstream finance. A key example is the collaboration between Streamex and Simplify Asset Management, which manages about $10 billion in ETFs. Together, they are developing yield-bearing tokenized gold products designed for ETF and ETP structures, an early signal that tokenized commodities are beginning to blend with traditional investment vehicles, expanding the reach of digital gold into regulated markets.

What Are Tokenized Commodities?

Tokenized commodities are digital tokens on a blockchain that represent ownership of a physical raw material, such as gold, oil, or wheat. The physical asset remains securely stored in vaults, tanks, or warehouses, while each token serves as digital proof of ownership.

This process turns a tangible asset into a liquid, divisible digital instrument, allowing investors to buy, sell, or trade fractions of a commodity as easily as they would a cryptocurrency. The token’s value stays directly pegged to the underlying real-world asset, ensuring that the digital and physical markets move in sync.

What are the Types of Tokenized Commodities?

The tokenization trend is beginning to reach nearly every major commodity class. Below is a breakdown of the key categories and how each one works in practice.

1. Precious Metals

This is the most established and successful category of tokenized commodities, with gold leading the way.

Examples: Gold, Silver, Platinum, Palladium

How It Works: Physical bullion is stored in insured, high-security vaults. Each digital token represents a specific amount of the metal. For instance, one token might equal one gram or one troy ounce of gold.

For example, each PAXG token is backed by one fine troy ounce of a London Good Delivery gold bar stored in Brink’s vaults. It is one of the most liquid and widely recognized gold-backed tokens.

These projects have proven that blockchain can modernize one of the world’s oldest forms of wealth storage.

2. Energy

Tokenizing energy commodities aims to bring transparency and efficiency to one of the most complex and opaque global markets.

Examples: Crude Oil, Natural Gas, Electricity

How It Works: Tokens can represent ownership of a specific quantity of an energy resource in storage or a contractual claim on future production. This reduces paperwork, speeds up settlement, and simplifies cross-border energy trading.

For instance, energy giant Shell has piloted a blockchain platform for crude oil trading. While still institutional rather than retail-focused, it highlights how tokenization can streamline large-scale energy transactions.

3. Agricultural Products

This category connects the traditional world of farming with modern financial technology, offering new ways to raise capital and manage price risk.

Examples: Wheat, Corn, Soybeans, Coffee, Cocoa

How It Works: Tokens represent ownership of a specific quantity of harvested crops stored in certified warehouses. This gives farmers access to global markets, helps them secure better prices, and lets investors gain exposure to agricultural assets without handling the logistics.

For instance, in a collaboration between the World Bank and the Queensland Treasury Corporation, Australian sugarcane was tokenized. Each token represented a portion of the harvest, creating an innovative model for cooperative financing and investor participation.

4. Base Metals and Industrial Materials

Base metals form the backbone of industrial production. Tokenization can make these markets more efficient and accessible to a broader range of investors.

Examples: Copper, Aluminum, Nickel, Steel

How It Works: Tokens are issued against metal held in certified storage facilities. By fractionalizing large industrial assets, tokenization allows smaller investors and traders to participate in markets that were previously dominated by institutions.

5. Carbon Credits

A fast-emerging category, tokenized carbon credits bring liquidity and transparency to the environmental markets, driving the global energy transition.

Examples: Carbon Offsets from reforestation, renewable energy, or clean technology projects

How It Works: Each token represents one verified carbon credit, typically equal to one metric ton of CO₂ offset. Tokenization allows these credits to be easily traded, tracked, and retired within both traditional and DeFi ecosystems.

For example, Toucan Protocol is building a bridge between carbon registries and blockchain networks. It tokenizes verified carbon credits so they can move freely across DeFi markets, potentially making the carbon economy far more transparent and efficient.

Why Gold Leads the Tokenized Commodity Revolution?

While many commodities, from crude oil to agricultural goods, are being explored for tokenization, gold stands apart. Its unmatched history of trust, robust market infrastructure, and enduring stability make it the natural frontrunner in this new era of digital finance.

1. The Trust Stack Advantage

Gold’s dominance begins with its deep “trust stack,” built over thousands of years rather than decades. This foundation gives it an authenticity that other commodities cannot replicate.

Centuries of Established Confidence

For more than 5,000 years, gold has symbolized wealth, security, and permanence. Its universal recognition as a safe-haven asset gives it an intuitive appeal. Investors already understand and believe in gold’s value, which makes them far more willing to embrace its tokenized form.

A Mature Custodial Ecosystem

Gold benefits from a global custodial network worth over $ 200 billion, supported by institutions such as Brinks, Loomis, and Lloyd’s of London. This existing system of high-security storage, insurance, and auditing means tokenization does not need to build trust from scratch. 

Instead, it adds a transparent blockchain layer on top of a proven physical infrastructure, reducing risk while increasing accessibility.

2. Regulatory and Market Maturity

Gold operates within one of the most mature and regulated markets in the world, giving it a clear path toward seamless blockchain integration.

Established International Standards

Organizations like the London Bullion Market Association and the Bank for International Settlements have long governed global gold standards. The LBMA’s century-old Good Delivery List sets recognized benchmarks for quality and provenance. 

This established compliance framework gives regulators confidence and makes it easier to approve tokenized gold products compared to less-regulated commodities such as lithium or palladium.

Streamlined Compliance

Because the gold market already follows strict rules, tokenization projects can focus on ensuring that the digital components, such as tokens and smart contracts, meet regulatory expectations. As a result, tokenized gold has been approved for trading on regulated exchanges, a milestone still out of reach for most other tokenized commodities.

3. Liquidity and Global Recognition

Gold’s market structure perfectly aligns with the global, round-the-clock nature of blockchain assets.

Exceptional Liquidity

With more than 130 billion dollars in daily trading volume, gold’s liquidity provides a stable pricing foundation for its tokenized form. This helps prevent the sharp volatility seen in smaller commodity markets. For perspective, silver’s daily trading volume is around 4 billion dollars, while platinum trades below 200 million dollars per day.

Recognized Collateral

Gold is already widely accepted as high-quality collateral in traditional finance, a role that translates seamlessly to decentralized finance. Its relatively low volatility makes it an ideal form of collateral for lending and other blockchain-based financial applications.

4. Institutional Adoption Momentum

Gold’s leadership in the tokenized commodity space is not theoretical; it is happening now.

Live Projects in the Market

Tokenized gold is already a multi-billion-dollar asset class. Projects such as Paxos Gold (PAXG) and Tether Gold (XAUT) demonstrate real-world adoption at scale. Traditional financial institutions are following suit. 

HSBC’s Orion platform, for example, enables blockchain-based tokenization of gold stored in its London vaults, signaling strong institutional confidence in this model.

The Foundation for Real-World Assets

Gold is becoming the gateway asset for bringing real-world value onto blockchains. Its trust, stability, and global recognition make it the ideal proving ground for the legal, technical, and regulatory frameworks that will eventually support tokenized versions of real estate, bonds, and other assets. 

By starting with gold, the industry is creating the blueprint for tokenizing the broader economy.

Main Regulatory Considerations for Tokenized Gold Commodity

Tokenized gold operates at the intersection of traditional finance and digital innovation. It combines the rules of commodity trading with the rapidly evolving laws governing crypto assets. Because of its hybrid nature, regulators may treat it as a commodity, a security, or even a payment asset. 

Issuers must therefore design their products carefully so they can meet compliance standards while still offering investors real value, in a secure and transparent manner.

1. Securities Law

The first and most important question is whether a tokenized gold product qualifies as a security, which would impose heavy registration, disclosure, and compliance obligations.

The U.S. Benchmark: The Howey Test

In the United States, the Securities and Exchange Commission, or SEC, applies the Howey Test to determine whether an asset constitutes an “investment contract.” Under this test, an asset is a security if it involves:

1. An investment of money
2. In a common enterprise
3. With a reasonable expectation of profits
4. Derived from the efforts of others

Application to Tokenized Gold

If a tokenized gold product is marketed as an investment opportunity, particularly if its value depends on the issuer’s managerial decisions, it risks being treated as a security. Reputable projects, such as PAX Gold (PAXG), structure their tokens as direct ownership claims on specific physical gold bars, not as shares in a business venture. 

This approach helps avoid classification as a security by framing the token as a digital representation of a tangible asset rather than a speculative investment.

2. Commodities and Derivatives Oversight

If a tokenized gold product avoids being categorized as a security, it may still be subject to commodities and derivatives regulation.

The U.S. CFTC Perspective

The Commodity Futures Trading Commission (CFTC) regulates commodities and their derivatives under the Commodity Exchange Act (CEA). Gold itself is a commodity, and the CFTC has already asserted authority over digital assets such as Bitcoin, establishing a clear precedent for tokenized commodities.

Key Consideration

If a tokenized gold platform offers futures, margin trading, or swaps linked to the token, it falls directly under CFTC jurisdiction. Such platforms must register as Designated Contract Markets (DCMs) or Swap Execution Facilities (SEFs) and comply with strict reporting and anti-manipulation rules.

3. Anti-Money Laundering & Counter-Terrorist Financing

AML and CFT compliance are non-negotiable for all tokenized gold providers. Given the potential for high-value, cross-border transfers, regulators view tokenized gold as a high-risk asset class for illicit finance.

The U.S. Framework: The Bank Secrecy Act 

In the United States, issuers and exchanges dealing in tokenized gold generally qualify as Money Services Businesses (MSBs) or Virtual Asset Service Providers (VASPs). Under the BSA, they must:

• Implement a comprehensive AML program
• Conduct a full Know Your Customer verification
• Monitor and file Suspicious Activity Reports 
• Comply with the Travel Rule, transmitting sender and recipient data for transfers over $3,000

The European Approach: MiCA

The EU Markets in Crypto-Assets or MiCA regulation establishes a unified framework for digital assets. Under MiCA, tokenized gold typically qualifies as an Asset-Referenced Token. This classification carries specific obligations for:

• Custody of Reserve Assets: Gold must be stored, audited, and valued in accordance with strict standards.
• Whitepaper Disclosure: Issuers must publish a whitepaper approved by the regulator that details the token’s mechanics, risks, and governance.
• Prudential Requirements: Issuers must maintain sufficient reserves and own funds to safeguard holders and ensure redemption at par value.

4. Custody and Consumer Protection

At the heart of tokenized gold regulation lies the question of custody: how and where the underlying gold is stored.

Secure Storage and Legal Rights

Issuers must use regulated, insured, and reputable vaulting partners, typically those approved by the London Bullion Market Association or LBMA. Token holders should have a direct and enforceable legal claim to specific, allocated gold, not merely a general promise of redemption.

Transparency and Proof of Reserves

To build trust and satisfy regulators, issuers are increasingly expected to provide real-time, on-chain Proof of Reserves. This allows anyone, including users and regulators, to verify that every token in circulation is fully backed by physical gold. This transparency goes beyond periodic audits and sets a new benchmark for accountability in asset-backed tokens.

Turning Gold Commodity’s $1B Tokenization Edge into Real Revenue

The Federal Reserve found that tokenized gold holds about $1 billion in value, while other tokenized securities together reach only $200 million. This 5-to-1 gap shows that over 80% of tokenized asset value already sits in gold. 

It proves investors trust gold’s digital form more than any other tokenized asset. Businesses could use that trust to build reliable blockchain products. That move might quickly turn solid data into real revenue.

1. Launching a Tokenized Gold Product 

The simplest way to tap into gold’s tokenization momentum is to create your own gold-backed token, similar to PAXG or XAUT. By directly issuing a digital representation of vaulted gold, your business captures a share of the $1B flow.

Minting and Redemption Fees 

Mechanism: Charge small fees whenever users convert cash into your gold token (mint) and when they redeem it back into fiat or physical gold.

Example Calculation:

• Market share: 1% of tokenized gold market = $10M AUM
• Fee: 0.25% per mint/redemption
• Annual turnover: 1x

Revenue = AUM × Turnover × Fee  → $10,000,000 × 1 × 0.0025 = $25,000 per year

Why it works: As trading and redemption volumes grow, this model scales linearly. For every increase in AUM or turnover, revenue expands proportionally.

2. Custodial and Management Fees 

Mechanism: Charge an annual fee for vaulting, insuring, and auditing the underlying gold reserves.

Example Calculation:

• AUM: $10M
• Annual fee: 0.75%

Revenue = AUM × Annual Fee → $10,000,000 × 0.0075 = $75,000 per year

Traditional gold ETFs like WisdomTree’s GLDM charge just 0.10%, but tokenized products justify a higher rate by offering 24/7 trading and DeFi integrations. Paxos Gold (PAXG) has shown that even without an explicit management fee, margin can be captured through minting spreads and the yield on custodial gold holdings.

2. Gold-Backed DeFi & Financial Services Platform 

If launching a token is the direct play, building a financial services layer around gold is the ecosystem play. This is where real leverage and recurring, scalable revenue come in. Tokenized gold is programmable collateral that can power lending, yield, and liquidity products.

Gold-Backed Lending 

Mechanism: Allow users to deposit tokenized gold as collateral for stablecoin or fiat loans. You earn the spread between deposit yields and loan interest rates.

Example Calculation:

• Collateral deposited: $5M (0.5% of market)
• Loan-to-Value: 75% → $3.75M in loans
• Borrower rate: 5%

Revenue = Total Loans × Interest Rate → $3,750,000 × 0.05 = $187,500 per year

Why it is powerful: Gold’s low volatility supports higher LTVs and fewer liquidations, offering users a safer borrowing experience than crypto-backed lending. For the platform, that stability translates into predictable and scalable income.

Institutional Yield Vaults 

Mechanism: Act as a trusted intermediary for corporate treasuries. You pool their tokenized gold and deploy it into vetted, audited DeFi protocols. Clients earn a steady yield, and you take a performance fee.

Example Calculation:

• Institutional deposits: $20M
• Net client yield: 3%
• Performance fee: 20%

Revenue = (AUM × Yield) × Fee → ($20,000,000 × 0.03) × 0.20 = $120,000 per year

Why it works: Corporations want exposure to DeFi returns but avoid the complexity and risk. You handle due diligence and compliance; they get the upside. This model mirrors what firms like Maple Finance or Ondo Finance have achieved, except now the underlying asset is gold, not volatile crypto.

Conclusion

Tokenized gold is truly where trust meets technology, and it shows how physical assets can confidently move into the digital world. Gold naturally leads this shift because it has intrinsic value and offers liquidity that few other assets can match. As regulations evolve, it continues to provide a safer path for digital asset adoption. With Idea Usher, enterprises can build secure, fully compliant platforms while still driving innovation and revenue. This new approach may soon redefine how ownership and liquidity work in the modern digital economy.

Looking to Develop a Tokenized Gold Commodity Platform?

Idea Usher can help you develop a tokenized gold commodity platform by building a secure, scalable blockchain architecture that ensures full compliance from the outset. Our expert team will design smart contracts, integrate custodian APIs, and optimize every system layer so your platform can run efficiently and adapt quickly to market needs. You will get a solution engineered for real-world performance and long-term reliability

Why Partner With Us

• Elite Engineering: With over 500,000 hours of development experience, our team of ex-MAANG/FAANG engineers turns complex blockchain ideas into reliable, production-ready platforms.
• Complete Build: From smart contract audits and custodian API integration to intuitive investor dashboards, we handle every part of your platform’s technology stack.
• Built for Trust and Scale: Security and compliance are embedded into every layer, ensuring your platform meets institutional standards from day one.

Explore our latest blockchain projects to see how we’re powering the next generation of tokenized commodity platforms.

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