London Metal Exchange explores tokenizing Hong Kong warehouse metal for financing

The LME is reportedly looking to turn off-warrant metal stored in Hong Kong into digital assets, a plan tied to the city's push to become a commodities hub The London Metal Exchange wants to turn metal sitting in its Hong Kong warehouses into digital tokens that businesses could use to raise financing. The plan was described by three people with knowledge of the matter, according to Reuters. The focus is on what the industry calls off-warrant metal. A warrant is the LME’s title document, the paperwork that makes a stored lot of metal deliverable against exchange contracts. Off-warrant metal sits in LME-approved storage but outside that warrant system. Think of it as inventory parked in the right building but not checked into the official ledger. That distinction matters for financing. According to the research findings, there is no standardized mechanism for using these off-warrant inventories as collateral for loans and other financial transactions. Tokenization is the proposed fix. The idea is to create a digital representation of each lot, which could then be pledged, tracked and potentially moved between parties more easily than paper records. The effort remains at an early sta...