UK FCA Develops Framework for Tokenized Gold with Major Banks

The UK Financial Conduct Authority (FCA) is working on a framework for tokenized gold with major banks and other market participants, according to an August 10 report by the Financial Times.

The FCA plans to develop industry standards for tokenized collateral use cases, which could include tokenized gold as collateral in uncleared over-the-counter derivatives markets. This effort builds on a May 18 joint policy paper from the FCA and Bank of England, including the Prudential Regulation Authority, which identified tokenized gold as a possible form of collateral.

The project has significant weight behind it, given that London handles approximately 70% of global gold trading. The regulatory discussions aim to adapt existing wholesale market rules rather than creating separate regulations for each tokenized asset. The FCA and PRA are examining tokenized gold for uncleared derivatives collateral, while the Bank of England plans to consider how tokenized versions of assets accepted as regulatory collateral could qualify at central counterparties under UK EMIR.