Gold-backed tokens: structuring and regulatory considerations in the Cayman Islands and BVI

Blockchain innovation continues to evolve and the tokenisation of traditional assets has become one of the most significant developments in recent years. Among these, gold-backed tokens stand out for combining the enduring value of gold with the efficiency, transparency and divisibility of blockchain technology.

Gold-backed tokens were among the most actively discussed topics at Consensus Hong Kong earlier this month, demonstrating the pace at which tokenised real-world assets (RWAs) are moving from pilot programmes to institutional-grade production.

As the broader RWA narrative matures, dialogue has shifted from experimentation towards structure, legal certainty, risk management and governance standards.

As jurisdictions like the Cayman Islands and British Virgin Islands (BVI) continue to provide trusted and flexible regulatory environments for digital asset projects, they are increasingly being selected as the preferred venue for establishing and managing gold token structures.

This briefing focuses on structures utilising Cayman Islands and BVI vehicles, in which Ogier has the expertise to help you with your gold-backed token project.

What are gold-backed tokens?

A gold-backed token is a digital token issued on a blockchain that represents ownership of, or a claim over, a specific amount of physical gold held in custody. Each token is typically pegged to a defined weight of gold – for instance, one token representing one gram or one troy ounce of physical gold.

Gold tokens aim to provide stable value relative to other volatile crypto assets, transparent ownership and fractionalisation of physical gold holdings and efficient transferability using blockchain infrastructure. These features have attracted both fintech innovators and traditional investors seeking digitised exposure to gold while maintaining the confidence of physical reserves. Enhanced integration with digital custodians and programmable capital strategies has further broadened the appeal of gold tokens as an effective inflation hedge and portfolio diversifier supporting fractional ownership and accelerated settlement.

Structuring gold token projects in the Cayman Islands and BVI

The structuring of gold token projects typically involves a hybrid of Cayman Islands and BVI entities, with each jurisdiction contributing distinct advantages in terms of governance, operational management and regulatory positioning.

Cayman Islands

The Cayman Islands has established itself as a leading jurisdiction for digital asset projects through the Virtual Asset (Service Providers) Act (Revised) (the Cayman VASP Act).

Gold token projects operating in, or from within, the Cayman Islands may fall within the scope of the Cayman VASP Act if the issuer conducts virtual asset services such as issuing or exchanging tokens for consideration, or the safekeeping or administration of virtual assets.

Cayman structures typically involve foundation companies limited by guarantee to provide governance or long-term maintenance of the token protocol, and exempted companies to hold and manage the physical gold backing the token.

Depending on whether the tokens are redeemable, transferable or provide an investment return, the entity may require registration or licensing with the Cayman Islands Monetary Authority (CIMA). For example, if the project is structured as a gold fund issuing tokenised fund interests, the vehicle may require registration with CIMA as a regulated mutual fund or private fund. The specific regulatory pathway will depend on the economic substance of the arrangement and the nature of the rights conferred by the tokens.

British Virgin Islands

BVI entities often act as token issuers within multi jurisdictional structures, with other functions housed in separate vehicles. This modular structuring allows sponsors to allocate specific roles to appropriate entities while preserving clear lines of accountability and regulatory compliance.

The BVI Financial Services Commission takes a technology-neutral approach to virtual assets. The BVI Virtual Assets Service Providers Act (Revised) (the BVI VASP Act) establishes a clear and supportive framework for virtual asset activities carried out in, or from within, the BVI, based on Financial Action Task Force (FATF) recommendations. A notable aspect of the legislation is its detailed definitions and boundaries with respect to what constitutes a virtual asset and what activities fall within the regulated perimeter.

The mere act of issuing tokens, without more, is not a regulated activity under the BVI VASP Act. The approach taken by the BVI therefore avoids imposing unnecessary administrative and compliance burdens on pure token issuers, supporting innovation and operational flexibility within the jurisdiction.

However, the absence of direct licensing requirements does not eliminate broader compliance obligations. All BVI persons, even if not regulated, are subject to the BVI Proceeds of Criminal Conduct Act and other general criminal conduct legislation. Accordingly, BVI token issuers must still ensure that appropriate measures are in place so they do not become party or accessories to money laundering, sanctions breaches or other criminal activity through token offerings.

Key legal and compliance considerations for structuring gold-backed tokens

When structuring a gold-backed token, issuers should address the following compliance and governance matters.

Proof of reserves and valuation

Independent verification of gold holdings is essential to maintain transparency and public trust. Valuation and pricing – typically based on transparent spot prices – must be robust,  using trusted and independently verifiable data feeds, with clear contingency plans for market disruption or technological failure.

Custodial arrangements

Clear legal ownership and segregation of assets, often supported by regulated third-party custodians, is fundamental. Custody and safekeeping arrangements require careful legal assessment, particularly when it comes to enforcing claims to physical gold in both the Cayman Islands and BVI, as well as any relevant vaulting jurisdiction. Full audit rights, insurance coverage and dispute resolution mechanisms should be addressed in detail to support investor confidence and regulatory compliance.

AML and KYC compliance

Both the Cayman Islands and BVI align with FATF standards, requiring robust anti-money laundering and customer due diligence frameworks. We are also seeing further standardisation in issuance, disclosure and KYC/AML arrangements and a shift toward "permissioned decentralised finance (DeFi)" – where on-chain composability is balanced with rigorous compliance procedures. This approach aligns well with both Cayman and BVI regulatory frameworks.

Smart contract audits

Technical review is necessary to ensure the accuracy and reliability of token functionality, particularly as gold tokens are integrated into more complex programmable capital and decentralised finance strategies.

Disclosure and offering documentation

Proper description of token features, rights, redemption processes and associated risks is critical to avoid potential misrepresentation or securities law breaches. Liquidity and redemption processes should be clearly explained, addressing secondary market depth, physical versus cash settlement and appropriate rights of suspension. This is particularly important in light of the more globally standardised regulatory matters and cross-border data sharing requirements that are emerging for digital assets.

Why use Cayman and BVI for gold-backed token structures?

The Cayman Islands and BVI offer clear digital asset frameworks, deep professional expertise and tax-neutral structuring suitable for RWA projects.

Their mature legal environments enable on-chain innovation to align with off-chain fiduciary and investor protection standards. This blend of regulatory certainty and practical flexibility makes both jurisdictions strong choices for compliant tokenised asset projects.

Cross-border securities, sanctions and marketing considerations must also be assessed alongside local regulatory requirements.

The outlook for gold-backed tokens

Tokenised commodities are expected to become increasingly mainstream as blockchain adoption moves into regulated and institutional markets. Gold-backed tokens present a viable means of diversifying access to physical assets while meeting the evolving expectations of transparency and efficiency.

For promoters and investors, engaging early with qualified offshore counsel is essential to ensure that the projects are structured in a manner that satisfies both regulatory and commercial objectives.

How Ogier can help

Ogier's multi-disciplinary Technology and Web3 team assists clients with creating, launching, funding and evolving their digital and decentralised projects and implementing blockchain and cryptocurrency related investment products. With experts across our jurisdictions, we bring a global perspective to our work with clients, which includes launching cryptocurrency and blockchain related funds, hedge and venture capital, private sales, airdrops and grants of tokens and non-fungible tokens and a variety of fundraising.

Recognised as leaders in legal and regulatory matters concerning crypto, blockchain, Web3 and virtual assets, our team has contributed to major projects and cases, including those involving leading stablecoin issuers. For further assistance or information, please contact our key team members listed in this briefing.

Get in touch with our team if you require any assistance.

View our Consensus Hong Kong 2026 dedicated event hub for details about our attendees, information about our services and useful resources to assist you with your technology and Web3 objectives.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice