TL;DR:
- The UK’s FCA is preparing a regulatory framework for tokenized gold and its use as collateral in wholesale markets.
- London concentrates around 70% of global OTC gold trading volume, highlighting the fundamental weight of this initiative.
- A government working group estimated that tokenization could add up to £33 billion ($44 billion) to the UK’s annual GDP by 2035.
The United Kingdom’s Financial Conduct Authority (FCA) is holding conversations with banks and other industry participants to establish possible rules for tokenized gold. According to sources familiar with the initiative consulted by the Financial Times, the regulator also requested feedback on the use of this tokenized asset as collateral in wholesale markets. The FCA made no official comments on the matter at the time of publication.
London operates as the world’s largest over-the-counter gold trading hub, concentrating approximately 70% of the global notional volume of that market. This dominant position lends special relevance to any regulatory framework the British regulator decides to establish, given that the rules emerging from that process could influence international standards for similar products.
A Comprehensive Framework for Tokenization: Beyond Gold
The FCA’s initiative is part of a broader plan by the British government to expand tokenized financial markets. A government-backed working group indicated that tokenization could add up to £33 billion ($44 billion) to the UK’s annual gross domestic product by 2035.
The roadmap associated with that report contemplates the issuance of the country’s first tokenized government bond by early 2027. It also seeks to make tokenized securities usable for trading, settlement and as collateral in financial operations. The preparation of specific regulatory standards for tokenized gold is a crucial step in that direction, with direct implications for the infrastructure of the UK’s wholesale capital markets.
The current price of an ounce of gold is around $4,341, more than $1,000 below its ATH recorded in February of this year.
