Metals on the Blockchain: Companies Tokenize Assets Including Unmined Commodities

Companies are tokenizing metals, including gold, copper, and uranium, by issuing tokens backed by physical assets. Some firms are already offering tokens for unmined metals, with Nasdaq-listed Datavault AI planning to issue tokens tied directly to future extraction. This trend is part of the broader growth of real-world asset (RWA) tokenization, which has surpassed $43 billion in market capitalization.

The development of tokenized metals comes with additional complexities, such as considering the origin, quality, and characteristics of raw materials. Mike Oswin, global head of market structure and innovation at the World Gold Council, questioned whether retail investors can understand the process of funding part of the gold value chain.

Experts warn that the tokenized metals market is still in its early stages, with a small scale compared to traditional instruments. For example, the total value of gold ETFs was about $530 billion last month, while the two largest gold-backed tokens had market capitalizations of around $2.7 billion and $1.9 billion.

Ben Elvidge, head of alternative assets at Trilitech, sees tokenization as a way to provide direct commodity exposure without the costs and complexity of futures. Demand is coming from both institutional investors and 'crypto-native capital' seeking diversification through real-world assets with growth potential.