UK FCA Plans Regulatory Framework for Tokenized Gold
Taylor Wilson
The UK's Financial Conduct Authority is consulting major banks on how to regulate tokenized gold, with an announcement expected within months; London handles roughly 70% of global gold trading but faces rising competition from Shanghai and Hong Kong, making timely regulation a test of whether it can hold its dominant position.
What is tokenized gold, and why does the FCA want to regulate it?
Tokenized gold — digital tokens on a blockchain that represent ownership of physical gold bars — currently sits outside the FCA's regulatory perimeter.
The FCA oversees gold derivatives and exchange-traded products, but physical gold trading itself is not in its remit. This means → tokenized gold falls into a regulatory gap: it is neither a derivative nor a traditional physical trade.
The FCA is now seeking industry feedback on whether tokenized gold can serve as collateral in wholesale markets, and how to govern it.
Why is London in a hurry?
London currently handles roughly 70% of global gold trading volume, but that dominance is under pressure.
An insider quoted by the Financial Times put it bluntly: "The competitive pressure from Shanghai and Hong Kong is immense … Shanghai wants to become the wholesale center for gold."
In plain terms = if London does not actively modernize its gold market through moves like tokenization, rival centers will get there first — and market share, once lost, is hard to reclaim.
How big is the economic prize?
Chris Woolard, the UK Treasury's new commissioner for wholesale digital markets, estimated that accelerating financial-market digitization could unlock roughly £33 billion in economic gains for the UK.
The FCA and the Bank of England's Prudential Regulation Authority have said they plan to publish further policy on tokenized collateral later this year.
This reflects a shift in the UK regulatory stance — from wait-and-see to actively setting the framework, on the logic that rules must come first to attract capital flows.
Is anyone already doing this in practice?
HSBC launched a tokenized gold product for Hong Kong retail clients over two years ago; it has since processed more than 276,000 transactions totaling over $2.2 billion.
The World Gold Council noted this year that digital gold will free ownership from "the constraints of bar specifications, vault locations, and fragmented settlement mechanisms."
This means → technology and market demand have already outrun regulation. The FCA's task now is to close the rule gap, not to start from scratch.
Content is for reference only, not financial advice.