London Metal Exchange Explores Tokenized Metal 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, according to CryptoNews.

The proposed initiative covers off-warrant metal, referring to inventory held in approved warehouses without an active LME warrant. Unlike warranted metal, off-warrant inventory lacks a standardized financing arrangement through the exchange's existing system. Under the proposed framework, digital tokens would represent eligible off-warrant inventory, allowing companies to pledge those assets when seeking loans. LME officials confirmed discussions are underway and scheduled a private industry roundtable for early November to examine the arrangements.

Hong Kong 2027 Pilot and Infrastructure

The initiative links directly to Hong Kong’s broader plans to become an international commodities trading center following China's 15th five-year plan. According to an official policy document cited by CryptoNews, Hong Kong Exchanges and Clearing (HKEX) is working toward a pilot for tokenized warehouse-receipt financing with designated banks in 2027.

HKEX is separately developing a multi-asset tokenization platform that incorporates carbon credits and commodity warehouse receipts. Hong Kong reported more than 60,000 square meters of warehouse space and inventories exceeding 20,000 metric tons after joining the LME’s approved delivery network in 2025.

Key facts

• The LME is exploring tokenization of off-warrant metals held in Hong Kong warehouses for loan collateral.
• HKEX is targeting a 2027 pilot for tokenized warehouse-receipt financing with designated banks.
• The initiative covers inventories held outside the exchange's warrant system, such as copper and aluminum.
• HKEX is developing a multi-asset tokenization platform for carbon credits and commodity warehouse receipts.