FCA prepares a regulatory framework for tokenized gold

The UK's Financial Conduct Authority (FCA) is holding talks with banks and market participants about future rules for tokenized gold, Cointelegraph reports, citing sources at the Financial Times. The regulator is gathering industry feedback on how tokenized gold could be used as collateral in wholesale markets, and is preparing to outline new regulatory standards for the asset class.

The move is a natural extension of the FCA and Bank of England's broader tokenisation push for wholesale financial markets: the regulators previously gathered industry input on tokenized securities and settlement instruments, and a government-linked task force estimated tokenisation could add £33 billion ($44 billion) a year to the UK economy by 2035. FCA Executive Director of Markets Simon Walls has framed the logic behind the wider program this way:

“Tokenisation has the potential to transform wholesale markets — reshaping how assets are issued, traded and settled.”

— Simon Walls, Executive Director of Markets, FCA

London accounts for roughly 70% of global notional gold trading volume, which is why regulators see the most potential there for moving part of that infrastructure onto blockchain rails. Separately, as part of the same tokenisation roadmap, UK authorities aim to issue the country's first tokenized government bond as early as 2027.

• FCA is discussing rules for tokenized gold as a form of collateral with banks
• London handles roughly 70% of global notional gold trading volume
• Tokenisation could add up to £33 billion ($44 billion) a year to the UK economy by 2035

This isn't the UK's first attempt to build a regulatory framework around tokenisation: we previously covered how a Barclays and PwC-backed task force estimated tokenisation's potential impact on the UK economy, and how Robinhood squeezed in a UK crypto registration before new FCA rules — the regulator is running several tracks of work on new digital asset classes in parallel.

None of this should be read as personalized investment advice.