UK Plans Bespoke Regime for Tokenised Gold Markets

TLDR

• The FCA plans to explore a bespoke regulatory framework for tokenised gold and possibly other tokenised commodities.
• UK authorities may consider targeted exemptions from existing CIS and AIF rules for certain tokenised gold products.
• Regulators are examining whether tokenisation can improve clearing, settlement and the use of financial collateral.
• The Bank of England is reviewing whether tokenised assets could qualify as collateral under its Sterling Monetary Framework.
• The UK handles about 70% of global wholesale gold trading volumes, according to the World Gold Council.

UK regulators are preparing new proposals for tokenised gold as they seek to support London’s role in bullion trading and custody. The Financial Conduct Authority plans to explore whether some products could operate outside existing fund rules, potentially expanding their market use. The FCA plans to set out the proposals alongside the Treasury and the Bank of England. The work will examine whether tokenised commodities need a tailored framework, focusing on gold.

Tokenised Gold Rules Under Review

Tokenised gold uses digital tokens to represent ownership of physical bullion that an issuer holds. Regulators see the model as a way to make gold easier to divide and transfer across digital markets.

Industry groups have raised concerns about uncertainty over whether some products fall under collective investment scheme or alternative investment fund rules. The FCA may work with the Treasury on a narrow exemption for selected products or gold market systems, but officials have not decided.

Jon Relleen, FCA director of infrastructure and exchanges, said tokenised gold has become a topic in industry talks. The regulator wants to test whether current UK rules remain suitable for gold trading and related market systems.

The review forms part of a wider UK effort to support tokenisation in wholesale finance. The FCA and Bank of England also plan to examine how digital assets could improve clearing, settlement and collateral movement between financial firms.

London Seeks Stronger Bullion Position

The UK handles about 70 per cent of global wholesale gold trading volumes, according to the World Gold Council. London remains a major centre for bullion trading and custody, but competition from China has increased as Beijing works to expand its market role. UK authorities are studying whether tokenised gold could make bullion reserves easier to use in transactions. The approach could also support faster movement of assets between financial institutions while keeping physical gold linked to each digital token.

The Bank of England is considering whether tokenised assets, including stablecoins, could qualify as collateral under its Sterling Monetary Framework. That system provides funding to eligible financial institutions. The central bank also plans to consult later this year on whether central counterparty clearing houses could accept tokenised assets as collateral. These plans sit alongside the FCA’s work on tokenised gold and broader wholesale market tokenisation.

---

---