UK Financial Regulator to Establish New Guidelines for Tokenized Gold

The UK’s Financial Conduct Authority is preparing to introduce new guidelines for tokenized gold to bolster the nation's position in global gold trading.

The Financial Conduct Authority (FCA) is actively working on regulatory frameworks for tokenized gold as part of a broader initiative to support digital assets and ensure London remains a leading global hub for gold trading.

Engaging with various financial institutions, the FCA aims to gather insights on how tokenized gold—digital tokens representing ownership of physical gold—can be utilized as collateral in wholesale markets. This effort is crucial as London’s historic dominance in over-the-counter (OTC) gold trading, which currently represents 70% of the global market, faces growing competition from China.

Tokenization, which involves the issuance of digital tokens backed by physical gold, is seen as a way to innovate the financial market. The FCA is also exploring potential applications of tokenized gold in digitizing wholesale financial markets. New regulations are expected to be announced in the coming months.

In July, Chris Woolard from the UK Treasury highlighted a 12-month plan to accelerate the digitization of financial markets, predicting an economic boost of £33 billion ($44 billion). The FCA, alongside the Bank of England, unveiled plans for market modernization and tokenization in May, with Simon Walls, FCA’s executive director of markets, stating that tokenization could significantly reshape asset trading and settlement processes.

Gold prices peaked at around $5,595 per troy ounce in January but have since declined to approximately $4,340.