How Issuers Are Unlocking Liquidity in Precious Metals Through Tokenization

Gold crossed $5,000 per ounce in early 2026. Silver posted a 140%+ rally in 2025. Yet most investors still access these markets through ETFs, futures, or vaulted physical bars - instruments designed decades ago that carry high minimums, settlement friction, and opaque supply chains.

Tokenization changes that. By representing physical commodities as blockchain-based digital tokens, issuers can create fractional, tradeable, programmable ownership backed 1:1 by the underlying asset. The tokenized gold market alone now exceeds $5.1 billion in market capitalisation. The broader tokenized commodities sector has surpassed $4.4 billion in total value locked.

This guide covers how commodity tokenization works, what legal and custody structures are required, and how to launch a compliant offering in Europe.

How Commodity Tokenization Works

Each token represents ownership of a defined quantity of a specific commodity - one gram of gold, one ounce of silver, one metric ton of wheat - stored in a verified, auditable location. The structure runs across four layers:

Why Precious Metals Are Particularly Well-Suited

Not every asset class benefits equally from tokenization. Precious metals have structural properties that make the transition straightforward:

• Standardised and fungible - a gram of gold is a gram of gold. Fractional ownership requires no interpretation.

• Transparent price discovery - global exchange pricing simplifies valuation and secondary market trading.

• Established custody infrastructure - the systems for storing and auditing physical metals are mature; tokenization bridges them to a blockchain, it doesn't reinvent them.

• Store-of-value demand already exists - tokenization improves access, it doesn't need to justify the underlying asset.

Legal and Regulatory Framework in Europe

Launching a commodity-backed token in the EU means navigating two overlapping regulatory domains.

MiCA - Asset-Referenced Tokens (ARTs) Tokens referencing a commodity or asset basket may be classified as asset-referenced tokens under MiCA, requiring the issuer to maintain reserves, publish a white paper, and meet specific governance standards.

Securities Classification Commodity tokens that function more like traditional financial instruments may fall under national securities law instead. In Germany, a tokenized gold note structured as an Inhaber-Schuldverschreibung (bearer bond) backed by physical gold falls under BaFin supervision. Issuers need either a prospectus or a valid exemption - for example, offerings under EUR 8 million qualify under the EU Prospectus Regulation.

Custody Requirements Physical commodity custody requires a qualified custodian with insurance and audit procedures. Digital token custody may require a separate crypto custody licence, depending on jurisdiction.

The regulatory setup varies by country. Platforms operating across multiple EU jurisdictions must handle compliance at both national and EU level.

Step-by-Step: Launching a Tokenized Commodity Offering

1. Source and Secure the Physical Asset

Partner with an accredited custodian providing proof of reserves. For precious metals, this means LBMA-accredited vaults with serial number tracking and third-party audits. For agricultural commodities, licensed warehouses with quality certification.

The custody agreement should define: storage location, insurance coverage, audit frequency, and redemption process (physical delivery or cash settlement).

2. Define the Token Structure

3. Set Up Compliance Infrastructure

Before issuing tokens, establish:

• KYC/AML verification for all investors, with ongoing monitoring

• Transfer restrictions via smart contract - ERC-3643 enforces investor eligibility on every transaction

• Prospectus or exemption filing with the relevant national authority

• Ongoing reporting: proof-of-reserves, NAV calculations, investor communications

4. Tokenize and Distribute

1. Token minting - create tokens with embedded compliance rules linked to custody records

2. Investor onboarding - verified investors access the offering through a regulated interface, review the data room (prospectus, custody proof, terms), and subscribe

3. Primary sale - investors purchase tokens at the offering price; funds acquire the physical commodity

4. Listing and trading - tokens trade on secondary markets under the same compliance rules

5. Manage the Ongoing Lifecycle

Post-issuance obligations include regular proof-of-reserves audits, spot price feeds linking token value to the underlying commodity, redemption processing, and regulatory reporting to the supervising authority.

Common Structures in the Market

Each structure carries different regulatory, custody, and operational requirements. The right choice depends on the underlying asset, target investors, and issuer capacity.

What to Look for in a Tokenization Platform

A platform for commodity tokenization should cover:

ONINO provides this infrastructure for commodity issuers and financial intermediaries across Europe - covering issuance, compliance, investor management, and full lifecycle operations.

Ready to launch?

ONINO's infrastructure handles compliance, investor onboarding, and reporting from day one - so you can focus on structuring your deal and building your investor base. Platforms go live in under 24 hours, with no internal technical build required.

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FAQ

Is tokenized gold regulated in the EU? Yes. Depending on structure, tokenized gold is regulated either as a MiCA asset-referenced token or as a security under national law (e.g. BaFin in Germany). Both frameworks require prospectus documentation, custody proof, and ongoing reporting.

What is the minimum investment for tokenized precious metals? This depends on the issuer's offering terms. Tokenization allows denomination as low as 1 gram of gold, enabling entry points that physical bullion or ETFs typically cannot match.

Can token holders redeem for physical gold? It depends on the offering structure. 1:1 backed token models typically allow physical redemption. Fund-based and revenue-sharing structures generally offer cash settlement instead.

What blockchain is used for commodity tokenization? Most EU-regulated commodity token issuances use EVM-compatible chains (Ethereum, Polygon) with ERC-3643 compliance-layer smart contracts that enforce transfer restrictions at the protocol level.

Summary

• Commodity tokenization creates fractional, tradeable digital ownership backed by physically held assets

• The tokenized gold market exceeds $5.1B; the broader commodities sector surpasses $4.4B in TVL

• EU issuers must navigate MiCA (ART classification) and/or national securities law depending on token structure

• The four-layer model - custody, legal wrapper, on-chain representation, redemption - applies across asset types

• Platform choice determines whether compliance, lifecycle management, and secondary market access are operationally viable