London Metal Exchange explores metal tokenization in Hong Kong

The London Metal Exchange (LME) has begun exploring plans to tokenize metal stored in its Hong Kong warehouses, potentially allowing businesses to use digital representations of physical inventories as collateral for financing. Summary The London Metal Exchange is exploring tokenization of off-warrant metals held in Hong Kong warehouses. Proposed digital representations could allow businesses to secure loans using physical metal inventories. HKEX is targeting a 2027 pilot for tokenized warehouse-receipt financing with designated banks. Hong Kong’s commodity strategy includes new warehousing capacity, tax incentives and blockchain-based collateral management. HKEX is developing a multi-asset tokenization platform incorporating carbon credits and commodity warehouse receipts. In an October 28 report, Reuters cited three people familiar with the discussions who linked the initiative to Hong Kong’s plans to become an international commodities trading center. The proposal would cover metal held outside the exchange’s warrant system, giving traders another route to obtain funding against their inventories. LME officials confirmed that discussions were underway but described the project a...