UK FCA Tackles Tokenized Gold Regulations Amid London Bullion Market Threat
The UK Financial Conduct Authority (FCA) is developing a regulatory framework for tokenized gold to modernize its wholesale financial markets and protect London's dominant position in global bullion trading. The FCA has held discussions with major banks and other industry participants about how tokenized gold could operate within the UK's regulatory system.
The regulator is examining how blockchain-based representations of physical gold could be used as collateral in wholesale financial transactions, with further regulatory standards expected to be outlined in the coming months. Tokenized gold typically represents ownership rights over physical bullion held in custody, allowing those rights to be transferred digitally using distributed-ledger technology.
London remains the center of the global bullion market, accounting for roughly 70% of worldwide gold trading volumes. The initiative builds on a broader tokenization strategy unveiled by the FCA and Bank of England in May, which aims to support the safe adoption of tokenized securities and modernize how financial assets are issued, traded, settled, and held in Britain.
The FCA is reviewing the eligibility of tokenized gold and tokenized money-market funds as collateral for uncleared over-the-counter derivatives. Tokenized gold could enable fractional ownership while reducing operational friction associated with moving claims on bullion between custodians and counterparties.