(Kitco News) - Looking beyond near-term volatility, the gold market has seen unprecedented investor demand, with growing interest in unconventional segments of the marketplace. One area drawing increased attention is digital gold, which has expanded significantly over the past year and is now estimated to be a roughly $4 billion market.
As cryptocurrencies continue to dominate headlines, there has been a steady shift taking place as physical gold is increasingly being brought on-chain—combining the metal’s centuries-old role as a store of value with the speed and flexibility of blockchain technology.
In an interview with Kitco News, Kurt Hemecker, CEO of Gold Token S.A., said the rapid growth in digital gold assets suggests the sector is moving beyond novelty and may represent a structural evolution in bullion markets.
Hemecker’s comments come as MKS PAMP moves to relaunch the DGLD gold token, which the Swiss refiner acquired in November 2025. He said the company sees significant room for growth in the space.
“Our goal is very clear,” Hemecker said. “We want DGLD to become one of the world’s leading gold-backed tokens—measured by circulating supply, on-chain liquidity, and institutional adoption. We are targeting the same league as products like Tether Gold and Paxos Gold, and we believe that’s achievable within the next 18 to 24 months.”
Although tokenized gold remains a small slice of the broader bullion market, Hemecker estimates it currently represents roughly $4–5 billion in value, compared to the approximately $23 trillion global gold market. However, he noted that growth rates paint a different picture.
Citing recent industry data, Hemecker said tokenized gold ranks among the fastest-growing gold investment vehicles when measured by market-cap velocity, outpacing many traditional products.
He added that tokenized gold is part of a broader expansion in real-world asset tokenization, a sector now estimated at more than $20 billion, excluding stablecoins. According to Hemecker, improved regulatory clarity and advances in blockchain infrastructure are helping attract institutional participation.
More than two decades ago, exchange-traded products transformed commodity markets by making gold more accessible to retail investors and easier to own. Tokenized gold, Hemecker said, is not intended to replace ETFs but to build on that evolution.
He outlined four characteristics that differentiate tokenized gold from traditional investment vehicles. Unlike ETFs or futures contracts, blockchain-based gold can trade 24 hours a day, seven days a week, allowing investors to respond immediately to geopolitical or macroeconomic developments.
Transactions also benefit from near-instant settlement, with ownership typically transferring within minutes rather than the days required in conventional financial markets.
Tokenization further allows for extreme fractionalization, enabling investors to own very small portions of gold—far smaller than what is practical with physical bars or coins.
Finally, tokenized gold can be programmable, meaning it may be used as collateral, integrated into lending structures, or deployed in yield-generating strategies across decentralized finance platforms and institutional financial systems.
“For some investors, ETFs are still the right tool,” Hemecker said. “But for others—especially those who want liquidity, fractional exposure, or the ability to use gold as collateral—tokenization opens entirely new use cases.”
Trust still matters
One of the most persistent questions surrounding tokenized gold is trust. Unlike Bitcoin, gold is a physical asset that must be mined, refined, stored, and audited.
“This is not a decentralized product in the way Bitcoin is,” Hemecker acknowledged. “You are always trusting someone—where the gold is stored, who audits it, and how it’s handled.”
He emphasized that differences in custody, provenance, and infrastructure can materially affect tokenized gold products.
“Not all gold tokens are created equal,” Hemecker said. “The provenance of the gold, the custody, the liquidity provider—all of that matters.”
Institutions are warming up
Contrary to the idea that institutional investors lack familiarity with blockchain, Hemecker said the conversation has shifted in recent years.
“Banks like UBS, HSBC, Deutsche Bank, and JPMorgan are already deeply involved in digital assets,” he said. “The real question now is how regulation evolves and whether tokenized gold can eventually receive the same treatment as physical gold under frameworks like Basel III.”
If that happens, Hemecker said institutional participation could accelerate.
Gold’s role as a hedge against monetary debasement and geopolitical uncertainty remains unchanged. Tokenization, he added, primarily expands the channels through which investors can access the metal.
“Gold isn’t going away,” Hemecker said. “What’s changing is how people can own it, use it, and move it. Tokenization doesn’t replace physical gold—it extends it into the digital financial system.”
