The UK Financial Conduct Authority (FCA) is exploring new rules for tokenised gold in wholesale financial markets, including its potential use as collateral for trading. The regulator has held discussions with banks and industry players as part of broader efforts to modernise London’s financial infrastructure through blockchain technology. London, which handles up to 70% of global gold trade volume, faces rising competition from Shanghai and Hong Kong as bullion hubs. The FCA is evaluating whether it can regulate tokenised gold, as it does not oversee physical gold trading but does regulate derivatives and ETFs. Tokenisation could improve efficiency in gold trading, clearing, and settlement.
The UK Financial Conduct Authority (FCA) is exploring regulatory frameworks for tokenised gold in wholesale markets. The regulator has held discussions with banks and other key industry participants, according to a report.
The FCA is considering whether tokenised gold can be accepted as collateral for wholesale trading. Tokenised gold represents digital ownership of physical gold stored by a custodian or issuer.
The FCA may release regulatory initiatives in the coming months. The regulator does not oversee physical gold trading but does regulate gold derivatives and exchange-traded funds.
This year, the FCA and the Bank of England’s Prudential Regulation Authority announced plans to offer additional guidance on tokenised collateral under existing rules. London faces growing competition from Shanghai and Hong Kong as global bullion centers.
The World Gold Council reports that London holds up to 70% of global gold trade volume. Sources noted that London could be overtaken by the two Asian markets without further action.
Tokenisation could improve efficiency in gold trading, clearing, and settlement processes. Chris Woolard, the UK Treasury’s wholesale digital markets champion, has stated that speeding up digital transformation could add up to $42 billion (approximately £33 billion) to the UK economy.
Commercial interest in digital gold is already evident. HSBC reported that its digital gold product for retail clients in Hong Kong has seen over 276,000 trades valued at more than $2.2 billion.
The World Gold Council has noted that tokenisation can enhance access to gold by reducing restrictions tied to physical bars, vault storage, and disjointed settlements. The FCA’s stance on tokenised gold will be critical for London to adapt to evolving markets and compete with rising digital asset centers in Asia.
