UK to Prepare Tokenized Gold Regulation Framework

The UK’s Financial Conduct Authority (FCA) has reportedly been discussing potential rules for tokenized gold with banks and other financial industry participants. According to people familiar with the discussions cited by the Financial Times, the FCA has also requested feedback on whether tokenized gold could be used as collateral in wholesale financial markets. The regulator is reportedly preparing to set out plans for new standards governing tokenized gold.

Tokenized gold could play a role in London markets

The discussions are particularly significant given London’s position in the global gold market. The city is the world’s largest over-the-counter gold trading hub, accounting for approximately 70% of global notional gold trading volume, according to the World Gold Council. Establishing clearer rules for tokenized gold could potentially support its integration into existing financial markets, including its use as collateral in institutional transactions.

UK pushes ahead with financial tokenization

The FCA discussions come as the UK continues a broader effort to develop tokenized financial markets. In July, a government-backed industry task force estimated that becoming a leader in tokenized finance could add as much as 33 billion British pounds ($44 billion) to the UK’s annual economic output by 2035.

The UK’s roadmap also calls for the issuance of its first tokenized government bond by early 2027. More broadly, the initiative aims to move tokenized securities beyond pilot projects by enabling them to be traded, settled and used as collateral in financial markets.

Sources:

https://cointelegraph.com/news/uk-regulators-tokenized-gold-framework-report

https://www.ft.com/content/9973f186-5834-4b66-8faa-e8b2e8711466