The Token and the Bar

Updated 9 October 2026. The response statement this piece was waiting for landed in September, and it brought something nobody asked for: a second consultation about tokenised gold and nothing else. The market figures have been re-pulled from the publishing institutions' own sources. The argument is unchanged.

Britain is preparing to decide what tokenised gold actually is, and the decision matters more than the technology. Under London, at the end of September 2026, there were 9,821 tonnes of gold, approximately 785,690 bars, valued by the London Bullion Market Association at $1.3 trillion. That is not an estimate offered by an interested party. The LBMA publishes the count every month, to the bar.

Then, on Monday 10 August 2026, the Financial Times reported that the Financial Conduct Authority had been holding early discussions with major banks about standards for tokenised gold: digital tokens standing for physical bars, usable in wholesale markets as collateral. The FT article sits behind a paywall, so we quote none of it directly, but the report was picked up and credited the same day by Ledger Insights and Finance Magnates, among others.

The rule from last time

In our first special report we set out the distinction the London market runs on. Allocated gold means specific bars, identified by serial number, held for you. Unallocated gold is a balance in a bank's books, a promise to deliver metal, backed by the bank's general assets. The London Precious Metals Clearing Limited definition is blunt about what that second position is: the holder is an unsecured creditor.

So we built a test, and we use it again here. For anything new that calls itself gold, ask one question. Metal, or promise?

What has actually happened

On 18 May 2026 the FCA and the Bank of England published a joint Call for Input on the future of tokenisation in UK wholesale financial markets. It is worth being precise about what that document is, because the press generally called it a policy paper. It is a consultation. It asks questions and sets no rules.

Gold, as an asset, appears in it exactly once, in paragraph 4.10. We quote the relevant clause verbatim from the official PDF: the FCA and the PRA are "similarly reviewing tokenised collateral eligibility, recognising the benefits of using tokenised Money Market Funds (MMFs) and tokenised gold as uncleared over-the-counter (OTC) collateral, subject to developing standards with industry."

The consultation closed on 3 July. On 13 July the Treasury assembled a tokenisation taskforce of 54 firms, chaired by Chris Woolard, with BlackRock, Goldman Sachs, JPMorgan and Barclays among the members. Then came the August report of the bank meetings. The published timetable runs on from there: a response statement over the summer, a full cross-authority roadmap later in 2026, the Bank upgrading its own collateral machinery in 2027, and a settlement service targeted for 2028 that could move tokenised assets against central bank money instantly. This is not a pilot. It is plumbing, being laid.

Why now

Because there is a race on. The World Gold Council estimates that "The London OTC market has historically been the centre of the gold trade and today comprises approximately 70% of global notional trading volume per our estimates." That figure is the Council's estimate and not an LBMA statistic, and it should always be quoted as such.

Meanwhile, in June 2025 the Shanghai Gold Exchange opened its first physical delivery vault outside mainland China, in Hong Kong, operated with Bank of China (Hong Kong) and supporting yuan denominated contracts, confirmed by the Hong Kong government's own release. Hong Kong has since built central clearing for gold. Shanghai's offer to the world is metal you can collect. London's counter offer, taking shape in these documents, is a bar that moves at the speed of software. Two cities are bidding for the same prize: whose ledger the world trusts.

The token can be real

Now, fairness. Tokenised gold already exists, and done properly it is impressive. This is a description of what these products say they are, in their own issuers' words, and nothing here is a recommendation for or against any of them.

Pax Gold states in its own terms and conditions that "Your PAXG tokens are akin to a warehouse receipt representing your beneficial ownership of a pro rata portion of Allocated Gold." One token, one fine troy ounce of a London Good Delivery bar, held in London vaults, with attestation reports issued since February 2025 by KPMG LLP. A warehouse receipt is exactly the honest way to describe it.

Tether Gold publishes quarterly. Its announcement of 3 August 2026 reports 707,747.139 fine troy ounces, approximately 22.01 metric tonnes, held as 1,759 London Good Delivery bars of roughly 12.5 kilograms each plus smaller bars, vaulted in Switzerland, against 612,823.66 tokens sold to customers. More metal in the vault than tokens in customers' hands. That remains the issuer's most recent quarterly statement; its third quarter figures are not due until the quarter has closed. Its issuer sits under El Salvador's digital asset regime rather than a British, Swiss or American regulator, a lighter overseer, and that belongs in the same paragraph as the serial numbers.

Put the flagships together and the tokenised gold market comes to something around four and a half billion dollars. Against London's vaults, that is about a third of one per cent. The technology can carry real metal. A token is not paper by nature. It is a container, and the question is what goes in it.

The word that is not there

So we downloaded the official PDF and searched it, word by word. The document is 28 pages. Gold appears twice, once as an asset in paragraph 4.10 and once in the figure of speech "golden source". Then search for the words that decide the question. Allocated: zero. Unallocated: zero. Bullion: zero. LBMA: zero. Precious metal: zero. Vault: zero.

The paper that would place tokenised gold at the heart of the world's largest gold market does not yet say what stands behind the token.

Be fair about that, because fairness is the standard here. It is a consultation, and its express purpose is to settle such details later, with industry. Elsewhere in the same document the regulators show they understand the failure question perfectly well. On custody of cryptoassets they write that the existing rules "would not achieve our desired policy outcome of adequately protecting clients' SICs and ensuring that these assets can be returned as quickly and wholly as possible in the event of a firm's insolvency." And in Policy Statement PS26/13 of June 2026, the FCA's crypto rules already require a firm to tell its client "the consequences for the client of the insolvency of the third party" holding the assets. The machinery for the question exists. When this piece was first written, it had simply not been pointed at gold.

That changed on 14 September 2026, and we have reported the whole of it separately. Gold did not get another paragraph. It got its own paper, a Call for Input on tokenised gold published alongside the feedback statement and running to 23 October 2026. We downloaded it and ran exactly the same word search we ran on the May document, on 23 September 2026. Gold: 85. Allocated: 5. Unallocated: 1. Bullion: 1. Precious metals: 1. Vault: 2. Redemption, a word the May paper never needed: 8. LBMA: still zero. The words that decide the question are finally in a document.

The right test, without the answer

The case for doing this is real, and the document makes it: firms cite "faster settlement and collateral movement, 24/7 trading and settlement, decomposition of cashflows, improved liquidity, efficiency savings through removal of duplicate ledgers and reconciliations, automation through smart contracts". All true. Efficiency was never the argument. Efficiency and ownership are different questions.

And the regulators have already written the right test, in this very paper. For PRA regulated banks, building societies and designated investment firms, the authorities "have confirmed that tokenised assets should, in general, receive the same prudential treatment as their non-tokenised equivalents, where legal rights are identical and underlying risks are comparable."

Where legal rights are identical. Identical to what? To the bar, or to the balance? The right question has been written down. The answer has not been published.

So picture the stack. You hold a token. The token names an issuer. The issuer names a custodian. The custodian names a vault. Somewhere at the bottom stands a bar. Each layer is a contract and each contract is a counterparty, until the layer at the bottom is a serial number. None of that makes tokens bad. It makes them layered, and it is worth knowing how many layers you are standing on.

Where the file stands

The authorities said they would publish a response statement over the summer, and on 14 September 2026 they did. Feedback Statement FS26/1, Tokenisation in wholesale markets, records 123 responses to the May Call for Input and promises a full Tokenisation Roadmap later this year. Its paragraph 1.10 is the sentence this piece had been waiting for: the FCA has published a Call for Input on tokenised gold alongside the Feedback Statement, prompted by several respondents mentioning tokenised gold in their feedback. The industry raised it. The regulator gave it a paper of its own.

One closing piece of arithmetic, and this month it makes the point the other way round, which is the better test. Over September the tonnage under London rose by 1.96 per cent, from 9,632 tonnes to 9,821. Over the same month the LBMA's own valuation of that vault fell, from 1.4 trillion dollars to 1.3 trillion. Both valuations are rounded to one decimal place, so we will not pretend to a precise percentage, but there is no rounding under which nearly two per cent more metal is worth less unless the price fell. A month earlier the same series showed one per cent more metal and a valuation up from 1.2 trillion to 1.4. In both months, almost the whole of the movement is the price, not the pile.

Our own reckoning, offered as ours and not as anyone's estimate, agrees. Those 9,821 tonnes are 315,752,482 troy ounces. At the price our own markets feed returned at 07:06 UTC on 9 October 2026, $4,197.40 an ounce, or £101.96 a gram, the metal under London comes to about $1.33 trillion. The bars did what bars do, which is sit still. The number attached to them is the thing that keeps moving, which is the whole of what this series has been saying for twenty episodes and is the reason central banks have been buying the metal every year since 2010.

London's answer to Shanghai's metal is a more sophisticated promise, and whether that promise turns out to be money or metal still depends entirely on what stands behind it. We ended this piece with an undertaking: we would read the response statement, count the words, and tell you which ones were missing. We have done that. The distinction this whole series is built on is now written down by the regulator itself, in paragraph 2.9 of the gold paper. Allocated gold "gives stronger certainty of ownership because specific assets are recorded by the custodian as owned by the account holder". Unallocated gold "represents a claim on an account provider, introducing counterparty exposure". That is our own test, in their words, in an official document, at last.

Two things temper it, and both belong here. A Call for Input asks questions and settles nothing, so the right test has been written down twice now without being answered. And of the seven words we searched for in May, six have arrived and one has not: LBMA still appears zero times in the paper about London's gold.

Until then, the older technology still works. A hallmarked piece of gold in your hand needs no framework, no custodian, no consultation and no response statement. Its guarantee is struck into its surface, which is a system that has run without a break since 1300, and you can read the marks yourself. It settled the moment you closed your fingers around it.

This article is history and reporting, not financial advice. Nothing here is a recommendation to buy or sell any asset, and no figure quoted is a forecast. Figures are stated as at the dates given, and the gold price moves.