Tokenization brings new scrutiny to physical commodity backing
Tokens backed by commodities are expanding beyond gold to silver and oil, but their value depends on clear links to enforceable physical assets
Tokenized commodities, meaning digital tokens linked to physical assets like gold, silver, or oil, are evolving from a focus on gold alone to a wider array of physical resources. CoinDesk, citing CoinGecko data, reported that the market capitalization of tokenized commodities reached $5.55 billion by March 2026, growing substantially from $1.43 billion at the start of 2025. This expansion has been led by gold-backed tokens from Paxos and Tether, but silver and oil are emerging contenders for token-based finance and trade.
Executives at Paxos Labs, Theo, and Energy Substantiation told CoinDesk that tokenization should go further than making ownership more accessible. They envision systems connecting investors and businesses that need inventory finance, opening markets usually limited to large institutions. These systems could potentially let holders of tokens earn income through lending or leasing models, as seen with Paxos’s gold token PAXGy and Theo’s thSLVR silver product.
For gold, the tokenization model is supported by standardized, auditable reserves, often London Bullion Market Association bars in third-party vaults. Blockchain Council underscores that the reliability of these tokens depends on custody and verification. The key question is whether each token represents a legally enforceable claim on actual inventory, warehouse receipt, or storage contract. Redemption for physical gold, when allowed, typically has minimum quantity and identity requirements.
Bringing this model to other commodities is more complex. For silver tokens, such as Theo's, there are new hurdles. The supply of available metal is tighter, markets are more volatile, and lease income is less predictable. Oil tokens, like EnSub's WTIC, face even greater challenges, as oil is bulkier, faces transport constraints, and is subject to more stringent regulation and logistics requirements.
We think the essential issue for a buyer or holder is how securely each token is tied to physical inventory and enforceable redemption. Paper claims and digital representations do not guarantee custody or delivery. In metals, the trustworthiness of a token relies on the clarity of its legal agreements, quality of third-party audits, and transparency of custody arrangements. Standards and independent reviews are improving, but differences persist between issuers and across commodities.
In our view, the growth of tokenized commodities will depend on whether new offerings can consistently document their physical backing and redemption processes. For metals, this means transparent reporting on bar lists, vault audits, and the legal rights behind each token. For oil and other assets, logistics and verification present additional barriers. Until these questions are addressed with clear evidence, the value of tokenization for most buyers is in how well it stands up to independent scrutiny, not just digital access.
Source: A New Golden Age: Imagining The Future of Digital Gold
Source: RWA Tokenization for Commodities - Blockchain Council
This article is general information, not investment advice. Facts from other publications are their reporting, linked above.