FCA Develops Framework for Tokenized Gold in London
The UK's Financial Conduct Authority (FCA) is developing a framework for tokenized gold, aiming to integrate it into London's $44 billion tokenization strategy by 2035. The FCA wants to make it easier for financial institutions to use tokenized gold as collateral, but there are challenges to overcome.
The traditional model of using gold as collateral often requires multiple intermediaries, complex ownership verifications, and lengthy settlement processes. Tokenization allows asset rights to be represented within a digital infrastructure, which could significantly accelerate their transfer.
Regulators must determine how to verify the link between the token and the physical metal, who bears responsibility for storage, and how holder rights are treated in the event of a counterparty default.