London Metal Exchange explores tokenizing metal in Hong Kong warehouses for financing
According to Reuters, the London Metal Exchange (LME) is exploring turning metal held in its Hong Kong warehouses into digital assets that can be used for financing, a plan linked to Hong Kong's five-year plan to expand its commodities hub.
The LME told Reuters that it is currently at an early stage of exploring the tokenization of off-warrant metal stocks to support corporate financing. Sources said the move aims to attract investors, traders and financiers and to open a new revenue stream for the LME. The plan excludes metal already on warrant, because warrants can already be traded or used as loan collateral; off-warrant stocks currently lack a standardized financing mechanism.
Tokenization would create digital assets for metal in the warehouses that could, for example, be used as loan collateral. LME Chief Executive Matt Chamberlain mentioned tokenization in a speech at LME Week Asia in May. People familiar with the matter said the LME has scheduled an invitation-only industry roundtable in early November to discuss the initiative. The plan is linked to Hong Kong's five-year economic blueprint published in September and to language in China's 15th Five-Year Plan supporting Hong Kong becoming a commodities trading center.
Original source:
Title: EXCLUSIVE: LME plans metal tokens push tied to Hong Kong's 5-year plan, sources say Publisher: Reuters Publication date: 2026-10-28 URL: https://www.reuters.com/world/china/lme-plans-metal-tokens-push-tied-hong-kongs-5-year-plan-sources-say-2026-10-28/ Source type: exclusive media report Verification status: full text read in this pass and cross-checked against the LME's response; verification date 2026-10-28 Supported content: exploration stage, off-warrant tokenization, financing use and link to Hong Kong's plan
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The LME has been owned by Hong Kong Exchanges and Clearing (HKEX) since 2012, and Hong Kong was approved as an LME delivery point in January 2025. Off-warrant metal is stored in LME-approved warehouses but lacks standard ownership documents; tokenization is proposed to give it a traceable digital representation that makes it easier to use as collateral. The LME's response confirmed that it is at an early exploratory stage and will engage with stakeholders.
Hong Kong's five-year blueprint proposes leveraging its advantage as an approved delivery point in the LME's global warehouse network to develop commodity trading, risk management and financing in tandem. China's 15th Five-Year Plan explicitly supports, for the first time, Hong Kong becoming a strong commodities trading center. No specific timetable, technology platform or token name has yet been announced for the initiative.
HKEX is also testing tokenized carbon credits to support near-instant settlement. The report is based on three people familiar with the matter; the LME has not officially confirmed all details and has acknowledged only early-stage exploration.
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The LME is exploring tokenizing off-warrant metal in Hong Kong warehouses into digital assets for financing, such as loan collateral.
The plan is at an early stage and is linked to Hong Kong's five-year economic blueprint and to China's policy support for Hong Kong becoming a commodities hub.