UK regulator to set rules for tokenized gold

The Financial Conduct Authority has held talks with banks and other market participants about potential rules for tokenized gold and is preparing new regulatory standards. The regulator has also sought feedback on using tokenized gold as collateral in wholesale markets.

People involved in the discussions described engagements with issuers, custodians and market infrastructure providers to explore how tokenized gold might be governed and how it could be used in secured transactions.

London handles about 70% of global notional over-the-counter gold trading volume, according to the World Gold Council, a factor that could make any UK rules influential for international markets.

Tokenized gold are digital tokens that represent ownership of physical gold held in vaults and are typically backed by audited reserves. Market participants highlighted potential operational benefits such as faster settlement and greater divisibility. The FCA has asked how these tokens might function as collateral in wholesale financing and settlement arrangements.

A government-backed industry task force published a roadmap estimating tokenization could add up to £33 billion to the UK’s annual economic output by 2035. The roadmap also targets the UK’s first tokenized government bond by early 2027 and recommends steps to make tokenized securities usable for trading, settlement and as collateral.

Industry participants say the FCA’s review will feed into broader UK efforts to expand tokenized financial markets and to clarify rules for firms working with digital assets. The regulator has been approached for comment on its consultations and on the timing of any formal proposals.

Market participants noted that clearer standards could affect custody arrangements and change audit and reporting requirements. Any new framework would need to align with existing client protection and market integrity rules while addressing the specific features of tokenized instruments.