FinanceUK Financial Regulator to Establish New Guidelines for Tokenized Gold

The FCA is set to reveal advancements in the formulation of new regulations for tokenized digital assets in the coming months.

By Olivier Acuna|Edited by Jamie Crawley23 min ago2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on Gold bars (Scottsdale Mint/Unsplash)SummaryShow
  • The FCA is formulating regulations for tokenized gold as part of a larger strategy for digital assets to maintain London’s leadership in global gold trading.
  • The regulator is engaging with financial institutions to understand how tokenized gold, which signifies ownership of physical bullion, can function as collateral in wholesale markets.
  • This initiative is part of a broader U.K. effort to digitize financial markets, which officials believe could contribute billions of pounds to the economy as London faces increased competition from China in gold trading.

The Financial Conduct Authority (FCA) of the U.K. is working on establishing guidelines for tokenized gold within its strategy to promote digital assets and ensure that London retains its position as the premier global hub for gold trading.

According to a report from the Financial Times, the FCA has reached out to various financial institutions to gather insights on regulations surrounding tokenized gold to stimulate market development.

Historically, London's over-the-counter (OTC) market has been the leading center for gold trading, currently accounting for 70% of the global notional trading volume, as noted by the World Gold Council. However, this dominance is increasingly under threat from China.

Tokenization of gold involves creating digital tokens that represent ownership rights to physical gold, with the issuer of the tokens holding the corresponding gold.

The FCA is also considering the digitization of wholesale financial markets and is seeking input on how tokenized gold could serve as collateral in these markets. Progress on the new regulations for tokenized digital assets is anticipated to be announced within the next few months, according to the report.

At the time of publication, the FCA had not provided any further comments to CoinDesk.

In July, Chris Woolard, who leads wholesale digital markets at the U.K. Treasury, outlined a 12-month plan to accelerate the digitization of the nation’s financial markets, projecting an annual economic boost of £33 billion ($44 billion).

The FCA, along with the Bank of England, announced plans for the tokenization and modernization of financial markets in May. Simon Walls, executive director of markets at the FCA, stated, "Tokenization has the potential to transform wholesale markets – reshaping how assets are issued, traded, and settled."

Gold prices reached a peak of approximately $5,595 per troy ounce in January but have since declined, currently hovering around $4,340.

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