Singapore challenges London and New York: a new clearing system will transform the gold market
Singapore is launching an ambitious program to transform itself into Asia's leading physical gold trading hub. Six of the world's largest banks, including DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB, have already joined the creation of a new clearing system for the precious metal, which will be stored on the island. This is a direct challenge not only to Hong Kong, which plans to launch its own clearing system in July, but also to traditional global hubs — London and New York.
Why Asia Needs Its Own Infrastructure
The key imbalance that Singapore aims to correct is obvious: Asia accounts for about 70% of global gold demand, yet pricing is still dictated by Western markets. Deputy Prime Minister Gan Kim Yong, who presented the package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore, called this a systemic problem. Liquidity drops significantly during Asian trading hours, making large institutional deals difficult. The new over-the-counter (OTC) clearing system, scheduled for launch at the end of 2026, with interbank trading starting in 2027, is designed to bridge the gap between local demand and global liquidity during daytime hours.
Tax Incentives and Storage for Central Banks
Singapore is creating a full-fledged ecosystem. Starting in October, the Monetary Authority will provide gold storage services for foreign central banks and sovereign wealth funds, encouraging them to hold reserves here. Additionally, as part of tax incentives, the 5% limit on investments in physical precious metals for funds and family offices is being lifted. This opens the door for increasing the share of gold in institutional investors' portfolios.
Race with Hong Kong and a Look to the Future
Competition with Hong Kong, which aims to launch its system as early as July, will intensify. However, Singapore is betting not on speed, but on scale and reliability. The support of six systemically important banks is a serious bid for commercial success. Notably, DBS is already preparing to issue tokenized physical gold for retail clients, while OCBC is actively trading and storing metal for institutions. The rise in gold prices this year has only fueled interest in new financial instruments.
Analytical Commentary from Cryptalist: Singapore is not trying to completely displace London; instead, it is creating a parallel, Asian liquidity center that will operate during convenient hours for the region. Given that 70% of demand is located here, the success of this initiative could fundamentally change the global structure of the gold market, weakening the West's monopoly on pricing. For the cryptocurrency market, this is another signal: traditional assets are actively seeking ways to tokenize and create efficient infrastructure, which will inevitably lead to convergence with digital technologies.