UK regulators are preparing a bespoke regulatory framework for tokenised gold, with the Financial Conduct Authority (FCA) planning to work alongside HM Treasury and the Bank of England to examine whether certain products could operate outside existing collective investment scheme and alternative investment fund rules.
The review focuses on whether tokenised commodities need a tailored framework, with gold as the central case. Tokenised gold uses digital tokens to represent ownership of physical bullion held by an issuer, and regulators see the model as a way to make gold easier to divide and transfer across digital markets.
Industry groups have raised concerns about legal uncertainty over whether some tokenised gold products fall under existing CIS or AIF rules. The FCA may consider a narrow exemption for selected products or gold market systems, but officials have not made final decisions.
Jon Relleen, FCA director of infrastructure and exchanges, said tokenised gold has become a topic in industry talks, and the regulator wants to test whether current UK rules remain suitable for gold trading and related market systems.
The initiative 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.
The UK handles about 70 per cent of global wholesale gold trading volumes, according to the World Gold Council. London remains a major hub for bullion trading and custody, but competition from China has increased. UK authorities are studying whether tokenised gold could make bullion reserves easier to use in transactions, while keeping physical gold linked to each digital token.
The Bank of England is also considering whether tokenised assets, including stablecoins, could qualify as collateral under its Sterling Monetary Framework, and plans to consult later this year on whether central counterparty clearing houses could accept tokenised assets as collateral.
