Commodity tokenisation is one of the fastest-growing segments of the RWA market. By representing physical commodities as digital tokens, investors gain exposure to traditional safe-haven assets with the benefits of blockchain technology.
Tokenised Gold
Paxos Gold (PAXG) — The leading tokenised gold product, with each token backed by one fine troy ounce of gold stored in Brink’s vaults. PAXG trades on Ethereum and offers redemption for physical gold.
Tether Gold (XAUT) — A gold-backed token from Tether, offering lower minimums and gold storage in Swiss vaults.
Tokenised Silver
Silver tokenisation is less developed than gold, but growing. Key providers include:
- Kinesis Silver (KAG) — Backed by physical silver, redeemable
- Tokenised silver ETFs — Emerging through platforms like Backed Finance
Tokenised Energy
The energy tokenisation market is emerging, with carbon credits and renewable energy certificates leading the way:
- Tokenised carbon credits — On-chain carbon offsets from Toucan and KlimaDAO
- Renewable energy tokens — Solar and wind energy production tokenisation
Benefits for UK Investors
- Fractional ownership — Buy as little as 1g of gold ($80)
- 24/7 trading — Unlike traditional commodity markets
- DeFi integration — Use tokenised gold as collateral for loans
- Instant settlement — No T+2 delays
- Lower storage costs — Digital custody is cheaper than physical
Risks
- Custody risk — Dependence on the provider’s storage and insurance
- Redemption risk — The ability to redeem tokens for physical metal
- Fee structures — Storage and management fees can erode returns
- Counterparty risk — Confidence in the token issuer
UK Tax Treatment
- Capital Gains Tax applies on disposal of tokenised commodities
- Tokenised gold may be treated differently from physical gold (which is VAT-exempt)
- EIS/SEIS relief does not apply to tokenised commodities
The Outlook
Commodity tokenisation is set to grow significantly as more institutional providers enter the market. The combination of traditional safe-haven assets with DeFi utility is a powerful value proposition for UK investors.
Disclaimer: Commodity investments carry risk including price volatility. Past performance is not indicative of future results.