Shifting physical assets onto the blockchain eases collateral frictions, argues crypto expert.
By Jesse Knutson, Head of Operations, Bitfinex Securities
This article was originally published in Risk.net.
Tokenised commodities are no longer a niche experiment. They are an example of how real-world assets are being rebuilt digitally on the blockchain. In a market where commodities like oil and gold are already among the most financialised assets globally, tokenisation is not creating new demand so much as reshaping the infrastructure that supports the existing market.
Volumes are growing, albeit from a low base. The market capitalisation of tokenised commodities stands at $7 billion, up nearly 600% since the start of 2025. Early adopters include crypto-native investors and high net worth individuals.
Crucially, this shift isn’t just about expanding access. It’s about transforming commodities into more mobile, flexible assets. In an increasingly volatile geopolitical environment, tokenisation is helping to enable more responsive risk management.
Gold Leads the Way
Adoption has so far followed a predictable path: it is concentrated in assets investors already trust. Tether Gold (XAUT) accounts for nearly 40% of the tokenised gold market, demonstrating that tokenisation gains traction first where pricing is transparent, custody is credible, and the underlying asset is already embedded in global financial markets.
Tokenised gold replicates ETF-style exposure while changing how the asset is transacted. On blockchain rails, gold becomes instantly transferable in real time and universally auditable. It is more usable as collateral than the physical version for two reasons. First, it can be deployed outside of traditional market trading hours. Second, it avoids the operational frictions around settlement times and moving, pledging and verifying usually required across trading venues. Industry trade body, the World Gold Council is recognising the coming shift, and recently announced an initiative to build a new platform connecting the physical asset and digital gold-backed products.
Beyond Gold
While tokenised gold has led the way, the pool of tokenised commodity products is expanding. According to the tokenised assets analytics platform RWA.xyz, tokenised commodity markets now extend into oil and gas, agricultural materials and commodity-adjacent green financing structures: soybeans and soybean oil each account for roughly $400 million in volume, and green-financing exposure for about $850 million. This suggests a model that can scale across categories.
Tokenisation offers advantages beyond mobility, particularly provenance. By creating transparent, immutable records of an asset’s origin and ownership, tokenisation strengthens supplychain integrity. This is increasingly relevant as regulators and investors tighten expectations around traceability and sourcing, particularly in areas such as sanctions compliance and environmental disclosures.
At the same time, geopolitics is reshaping investor priorities. Institutions are turning to defensive and real assets amid inflation uncertainty and concern over financial-system resilience. Recent instability in the Middle East has reinforced how quickly supply chains and energy markets can be disrupted, often with second-order effects across commodity pricing and liquidity conditions.
In that context, investors want assets that can be deployed faster and more flexibly and integrated more easily into modern treasury and collateral frameworks. Tokenisation addresses those requirements.
Tokenisation and Market Infrastructure
The next phase of tokenisation will be defined less by gold and more by industrial commodities such as copper and oil. They sit at the centre of manufacturing and the energy transition, where supply chains are capital-intensive and operationally rigid. Although tokenised hard commodities outside gold remain small in absolute terms, that reflects how early the market still is, not a lack of strategic relevance. Gold and silver behave primarily as monetary collateral commodities or stores of value. Copper and oil, by contrast, are flow-based industrial commodities, whose financial use is driven more by hedging and derivatives than by long-term holding.
In these markets, investors typically trade exposure rather than take delivery. The point of tokenisation, then, is not merely to mirror price exposure, but to make that exposure more mobile and operationally useful – easier to finance, post as collateral and move through trade flows. That is what makes tokenisation an infrastructure upgrade, not just a product innovation. Tokenised hard commodities are more naturally scalable than agricultural or livestock products because they are easier to store, standardise and verify over long periods, and are more often held as collateral or reserve assets rather than traded purely for short-term price exposure.
The 2020 oil market crash showed that industrial commodities carry real-world frictions that can disrupt markets – negative oil prices in 2020, for example, were not just a pricing quirk but a reflection of storage shortages and rigid delivery obligations. Tokenisation wouldn’t have prevented that crash, nor does greater mobility automatically reduce risk. But it can give market participants clearer visibility over ownership, collateral and exposures, and more flexibility in how positions are managed under pressure.
By enabling smoother collateral usage, faster transfer of positions and greater transparency around ownership, tokenised commodity structures can help market participants respond more dynamically under stress.
The access point is also important. Fractionalisation changes the game for both retail and institutional investors. Individuals can gain exposure to gold in pieces smaller than an ounce, making participation easier and portfolio construction more precise. At the same time, institutions can hold large positions without the operational burden of transporting, storing or insuring physical metal. By lowering both the entry barrier and the operational burden, tokenisation expands who can access commodities and how efficiently they can be deployed.
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