On Thursday, the trade association formed and funded by the world’s leading gold mining companies proposed a framework for addressing complexities tied to tokenized gold, with the aim of establishing standards for digital assets backed by the precious metal.
In an interview with Decrypt, the World Gold Council’s Global Head of Market Structure and Innovation, Mike Oswin, compared the council’s latest initiative to Intel’s iconic stickers. Commonly found on Windows-based laptops, they enable consumers to see that the chipmaker’s processors were embedded in a product at a glance, he noted.
“If you see that little symbol, you know that it's Intel inside,” he said. “You're getting the best processor, so you know you're walking out with what you need.”
For the World Gold Council, tokenization also represents an ability to extend its influence into an emerging market after establishing SPDR Gold Shares in 2004. The first U.S.-listed exchange-traded fund to be backed by physical gold currently has a market cap of $126 billion.
Research conducted by the World Gold Council has indicated that investors who self-custody their digital assets often prefer holding onto the precious metal themselves, Oswin added. That’s partly because of the bespoke custody arrangements that need to be created.
“At the end of the day, [gold] is a physical asset that comes in different sizes, shapes, forms, locations,” he said. “It's always been an inhibitor to these kinds of initiatives.”
Unlike stablecoins, which are often backed by cash and U.S. Treasuries, gold doesn’t generate income when it’s tucked away behind closed doors. Rather, there are costs associated with safeguarding the precious metal that don’t exist for other types of real-world assets.
Oswin said the council’s service could address that barrier to entry for other firms, which is in line with the World Gold Council’s goal of promoting the precious metal broadly.
“Instead of a handful of successful products, this will potentially lead to hundreds of products that can now come to market,” he said. “The business case stands up much better because of the way they can access the physical gold in a simplified, more cost-effective way.”
