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Why tokenisation Matters for the Bullion Industry and How Carrying Costs Fit In

By EVA MENG, Head of Matrixdock

Gold has served as the foundation of financial trust for centuries, not by convention, but by consensus. Governments, institutions, and individuals across every era have independently arrived at the same conclusion: gold holds.
Consensus alone does not determine what an asset can do. It only determines where trust begins. The history of financial innovation is not about creating new assets; it is about making existing ones more accessible, more liquid, and more useful. The printing press did not invent money. Electronic trading did not invent equities. Each innovation rewired what already existed, and in doing so unlocked value that was always there but could not move. Tokenisation works the same way.
This is why asset selection matters more than technology. A real-world asset (RWA) token derives its value from the asset beneath it. Sovereign debt has been among the earliest assets to see adoption in tokenisation: the most liquid, most institutionally understood instrument in global finance. Gold followed naturally: centuries of cross-border consensus, deep physical markets, and a role that every class of institutional investor already understands.

What ETFs Did and What Tokens Can Do Next

But gold ETFs were primarily designed to provide exposure. They were not intended to make gold directly usable across financial operations such as settlement or collateralisation. Instead, gold held through ETFs is accessed via fund shares and generally remains within the fund structure. This was a deliberate design choice that was entirely appropriate for the infrastructure of that era.
That infrastructure is now changing. As settlement systems modernise and programmable finance develops, the question is no longer only who can own gold but what gold can do. Can it settle a transaction instantly? Can it serve as collateral across borders without an intermediary? Can it move through financial systems as deep, widely recognised liquidity? ETFs cannot meet these demands, not because they failed, but because they were never asked to.
This is the generational shift. Gold ETFs financialised gold and brought it into portfolios. Tokenisation is designed to enable broader operational use, potentially allowing gold to be used within certain digital financial infrastructures. Gold tokens do not change what gold is. They change where gold sits in the financial system. For the precious metals industry, this means gold is moving from a passively held asset to an active one: the same gold, with a broader range of potential applications: 24/7 trading, fractional access, cross-border settlement, digital collateral, and B2B payment rails. All without leaving the LBMA-accredited supply chain.

Tokenised Gold: Market Cap Growth

Figure 1: Tokenised gold market capitalisation, 2020–2026.
The numbers bear this out. The tokenised gold market surpassed $6 billion in market capitalisation in February 2026, having grown 177% year-on-year in 2025. Trading volume reached $178 billion, surpassing all but one U.S.-listed gold ETF. Over 115,000 new wallets were added during the year, nearly tripling the holder base. These are not speculative numbers. They reflect a structural migration of precious metals into programmable digital infrastructure.

The Carrying Cost Challenge and a Silver Solution

While gold’s storage costs are relatively modest, silver presents a different economic profile. Silver is bulkier per unit of value, requiring significantly more vault space, higher insurance premiums, and greater logistics overhead. These carrying costs are a defining feature of physical silver ownership and any honest tokenisation of the metal must account for them.
ETFs have long handled this through annual expense ratios. The SPDR Gold Trust (GLD) charges 0.40% per year; the iShares Silver Trust (SLV) charges 0.50%. These ratios are deducted from fund assets daily: metal is periodically sold to cover expenses, so the metal backing per share decreases over time while the share count stays constant. It is an elegant mechanism but it blends genuine custody costs with centralised management fees and profit margins, making it difficult for holders to distinguish what they are actually paying for.
The Fungible Reserve Standard (FRS), published in March 2026 on Social Science Research Network (SSRN), offers a new approach designed specifically for assets where carrying costs are material. Rather than embedding these costs within a broader fee structure, FRS encodes them transparently into the token’s on-chain logic through a variable called q(t):the asset-per-token ratio, which decreases over time at a predefined annualised rate. Functionally, this is analogous to an ETF’s declining metal-per-share ratio, but with one key distinction: FRS isolates pure carrying costs (vaulting fees) from management fees and profit margins. What the holder sees on-chain is the actual cost of custody, not a bundled figure that obscures the issuer’s economics.

Carrying Costs:
Precious Metal ETFs vs. FRS-Based Tokens

Figure 2: Annual expense ratios of GLD and SLV compared with the FRS-based XAGm carrying cost rate.

The framework is built on what it calls the Economic Purity Principle: the token must faithfully represent the underlying asset’s economic characteristics, including its negative carry, rather than masking or transforming them. FRS preserves full compatibility with digital financial markets, where tokens built on it are designed to function in lending, trading, and collateral applications without requiring wrappers or rebasing that fragmented liquidity. It is asset-agnostic: applicable to any physical asset with predictable holding costs, from silver to platinum to warehoused commodities.

How Carrying Costs Are Encoded: FRS q(t) Mechanism)

Figure 3: The FRS q(t) mechanism — asset per token declines at a transparent, predetermined custody cost rate.

From Theory to Practice

Matrixdock’s XAGm, launched in March 2026, is the first tokenised asset built on the FRS framework. Each token is backed by fully allocated LBMA Good Delivery silver bars held in institutional-grade vaults. At launch, one XAGm equals one fine troy ounce of silver; over time, the ozPerToken value decreases daily at an annual 0.3% custody rate reflecting the pure cost of vaulting, with no management fee or profit margin layered on top.
XAGm sits alongside Matrixdock’s established gold token, XAUm, which represents one troy ounce of 99.99% pure LBMA-accredited gold, fully allocated and vaulted by Brink’s in Singapore and Hong Kong. XAUm operates with independent physical audits by Bureau Veritas, an LBMA-only supply chain, multi-chain availability across eight networks, and physical redemption in both Singapore and Hong Kong. In April 2026, OSL Group, a licensed Hong Kong digital asset exchange dual-listed both XAUm and XAGm, becoming the first regulated platform in the city to offer simultaneous gold and silver tokens.
The broader trajectory extends beyond commercial products. In December 2025, the Kingdom of Bhutan launched TER (meaning “treasure” in Dzongkha), a sovereign gold-backed token built on Solana with Matrixdock as technology partner. This is one of the first instances of a sovereign state leveraging public blockchain to tokenise national gold reserves.

The Road Ahead

For the precious metals industry, Tokenisation represents something significant: physical assets moving from passive holding to active use. Not replacing their reserve function, but adding a new layer on top of it. The same metal, stored in the same LBMA-accredited vaults, audited by the same independent firms, but now capable of settling instantly, serving as programmable collateral, and participating in digital financial markets that operate around the clock.
Gold was the right place to start. Silver, with its dual role as both a reserve asset and a critical industrial input now reportedly in its fifth consecutive year of structural supply deficit, is the natural next step. As tokenisation matures, the standards the industry adopts will determine whether digital precious metals earn the same trust that physical markets have built over generations. The consensus that built gold’s value over centuries is being put to work, powering its next evolution.
Disclaimer: These materials are provided for general informational purposes only and do not constitute investment advice, financial advice, an offer, solicitation, or recommendation to buy, sell, or hold any digital asset, or to engage in any specific investment strategy. Digital assets involve significant risk, including the potential loss of principal. Individuals should seek independent professional advice before making any investment decision. Matrixdock’s services or products referenced are subject to applicable jurisdictional and regulatory restrictions and may not be available in certain jurisdictions. Physical redemption locations depend on partnering custodian availability and applicable eligibility requirements.

This article is brought to you by SBMA in association with Matrixdock.

Eva Meng is the head of Matrixdock, an RWA tokenisation brand owned by BIT (previously known as Matrixport). Eva is passionate about bridging digital assets and traditional finance and is focused on leading the team to build cutting-edge technology in the tokenization space. Prior to BIT, Eva spent over 6 years in the digital asset mining industry.
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Mr Bernard Sin

Regional Director, Greater China
MKS PAMP (Singapore) Pte Ltd
Regional Director of Greater China since 2020, and previously Head of Trading. Bernard joined MKS PAMP as a country representative of Singapore in 1996 and moved to Switzerland in 1997. He holds an MBA in International Business from the European University in Geneva. Prior to joining MKS PAMP, Bernard worked 6 years for Standard Chartered Bank in Singapore and Hong Kong as an FX and Bullion Dealer.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA in partner with the Chairman and the Management Committee. Also, he is responsible for maintaining accountability to and the quality of, the Association’s Membership and the annual Asia Pacific Precious Metals Conference (APPMC) as well as representing the interests of the Association in relation to regulators, investors, media and international precious metal markets, and also responsible for all the legal and regulatory aspects of the work of the Association.

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Margaret Wong

Executive Director – Head of Operations

Margaret Wong, Executive Director – Head of Operations at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

Ms Crystal Xu

Vice President
TD Securities
Based in Singapore, Crystal has over a decade of experience in the metals market, specializing in trading, structuring, and delivering solutions for institutional and commercial clients across Asia. She leads initiatives spanning both physical and derivative products and plays a central role in advancing TD’s regional metals strategy. With deep expertise in market dynamics and strong cross-functional collaboration, she helps drive business growth, product innovation, and risk-informed decision making across the firm’s Asia-Pacific platform.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
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Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr Kazuya Naoki

Managing Director – Head of Metals, Asia
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Kazuya (Kaz) Naoki is the Managing Director – Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Raman Walia

Managing Director
JP Morgan Chase Bank N.A.

Raman is Managing Director for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.