UK regulators drafting framework for tokenized gold

Key facts

• UK regulators are reportedly preparing a framework for tokenized gold.
• The FCA is consulting financial institutions on its use as collateral in wholesale markets.
• This initiative is part of a broader UK strategy to digitize financial markets.
• London is the world's largest OTC gold trading hub, handling 70% of global notional trading volume.

The UK's Financial Conduct Authority (FCA) is reportedly developing a regulatory framework for tokenized gold, a move aimed at integrating digital assets backed by physical commodities into traditional financial markets. Sources familiar with the matter indicate the FCA has engaged with financial institutions to discuss potential rules for these assets, specifically exploring their use as collateral in wholesale markets. This initiative is part of a broader UK strategy to digitize financial markets, with projections suggesting tokenization could add billions to the country's annual economic output. London currently holds a dominant position in global gold trading, accounting for approximately 70% of the world's notional trading volume, and the regulatory push seeks to maintain this status amidst growing competition. The FCA is expected to provide updates on its progress in drafting new rules for tokenized digital assets in the coming months.