Image Credit: FCA
Key Takeaways
- The FCA opened a call for input on a dedicated “bespoke regime” for tokenized gold that could exempt it from existing fund rules.
- London currently handles about 70% of global notional gold trading volume, a position increasingly challenged by China’s growing gold market.
- The proposal is part of a broader U.K. tokenization push, including a joint U.S.-U.K. plan and Bank of England feedback efforts on financial market infrastructure.
The U.K.’s Financial Conduct Authority is considering a dedicated regulatory framework for tokenized gold that could exempt it from existing fund rules. The regulator opened a call for input on Monday, a step toward gathering industry views before any formal rule change.
Regulator Opens the Door to a Bespoke Regime
The FCA said in its call for input that it is exploring what it described as a “bespoke regime for tokenized gold.” The move is at an early consultative stage. No rule has been proposed or enacted, and any framework would follow further industry feedback.
Jon Relleen, the FCA’s director of infrastructure and exchanges, said ahead of the announcement that tokenized gold had emerged as an area of industry interest during the regulator’s broader discussions on tokenization.
“We’re keen to understand whether existing regulatory frameworks remain the right fit for gold markets and how innovation could strengthen the efficiency and competitiveness of U.K. markets.”
The regulator has said separately that it is preparing rules for tokenized gold as part of a wider digital-asset strategy aimed at keeping London as the top global venue for gold trading.
London’s Gold Market Faces Rising Competition
London’s over-the-counter gold market has historically ranked as the largest in the world by trading volume. It currently accounts for about 70% of global notional gold trading volume, according to World Gold Council data.
China’s gold market has been expanding and is increasingly cited as a competitive challenge to that position.
Tokenized gold refers to a digital representation of physical gold that grants the holder ownership rights over bullion held by the token’s issuer. The FCA said the format could make gold easier to transfer and use across digital markets, particularly as collateral in wholesale transactions.
“Gold tokenization could make gold easier to transfer and use across digital markets, particularly as wholesale collateral. It may also support new forms of retail investment and product innovation.”
Part of a Broader Tokenization Push
The tokenized gold proposal fits into a wider U.K. regulatory effort to encourage tokenization across wholesale financial markets. In July, the U.K. and the U.S. laid out a joint plan intended to make it easier for tokenized financial products to move between the two countries’ markets.
The Bank of England and the FCA have also sought industry feedback on tokenization’s broader use in financial market infrastructure. In a joint statement, the two regulators said the technology should be put to use in financial infrastructure to support economic growth and innovation.
What Comes Next for the Proposal
The call for input marks the start of a process, not a finalized policy. The FCA has not set out a specific timeline for moving from consultation to a formal rule proposal, and any exemption from existing fund regulations would require further regulatory steps beyond the current feedback stage.
The outcome will matter most for firms already active in gold-backed digital products and for market infrastructure providers weighing whether to build tokenized gold offerings under U.K. rules. A bespoke regime, if adopted, would give the FCA a purpose-built framework rather than fitting tokenized gold into fund rules designed for other asset types.
