- The FCA is preparing rules for tokenized gold under its wider digital asset strategy.
- London still handles 70% of global notional gold trading volume but faces pressure from China.
- The regulator is asking how tokenized gold could be used as collateral in wholesale markets.
The U.K. Financial Conduct Authority is moving toward a framework for tokenized gold as part of its broader digital asset strategy. The effort is tied to London’s long-standing role in the global precious metals market, where the city remains a leading center for over-the-counter gold trading. According to the Financial Times report cited in the source, the FCA has contacted financial institutions to discuss possible regulation that could support market growth. The regulator is also exploring whether tokenized gold could be used in wholesale finance, including as collateral, with further progress on rules for tokenized digital assets expected in the coming months.
Why tokenized gold is under review
The FCA’s work on tokenized gold fits into a broader push to shape digital asset rules while supporting established financial markets. People familiar with the plans told the Financial Times that the regulator approached financial institutions to explore how regulation in this area could be structured. The stated aim is to encourage market development while giving this form of digital asset a clearer place within the U.K. financial system.
In simple terms, tokenized gold means digital tokens that represent ownership rights in physical gold. The issuer holds the underlying metal as backing for those tokens. That structure makes tokenized gold different from an unbacked crypto asset, and it helps explain why the FCA is examining how existing market rules may apply and where more specific oversight may be needed.
London market pressure and digital asset plans
London has historically been the leading center for over-the-counter gold trading. The World Gold Council says the city currently accounts for 70% of the world’s notional trading volume. That scale gives U.K. authorities a strong reason to pay attention to new digital formats, especially if they begin to play a larger role in how gold exposure is issued, transferred, or pledged in financial markets.
At the same time, London’s position is facing stronger competition from China. The source says the planned work is part of a strategy to help London maintain its status as the top global hub for precious metal trading. That means the policy effort is not only about digital assets, but also about protecting a major part of the U.K.’s existing market infrastructure and international standing.
Tokenized gold in wholesale markets
The FCA is seeking feedback on the role tokenized gold could play in wholesale markets, including whether it could be used as collateral. That point is important because the review is not limited to retail investment access or product labeling. Instead, the regulator is looking at whether tokenized gold could serve a practical function inside larger market activity involving institutions and professional participants.
The report also says the FCA is expected to announce progress on drafting new rules for tokenized digital assets within the next few months. At press time, the regulator had not responded to CoinDesk’s request for comment. Even so, the consultation signals that tokenized gold is being considered within a wider regulatory buildout rather than as a one-off initiative.
UK digital markets strategy beyond tokenized gold
The review of tokenized gold aligns with a broader U.K. effort to speed up financial market digitization. In July, Chris Woolard, the U.K. Treasury’s wholesale digital markets lead, outlined a 12-month plan to accelerate that process. According to the source, the broader effort could add 33 billion pounds, or about $44 billion, to annual economic output.
Earlier, in May, the FCA and the Bank of England presented plans for tokenization and modernization across financial markets. Simon Walls, the FCA’s executive director of markets, said tokenization could transform wholesale markets by changing how assets are issued, traded, and settled. The source also notes that gold reached an all-time high of about $5,595 a troy ounce in January before falling to roughly $4,340, adding market context to why tokenized gold remains a notable area of interest.
Conclusion
The FCA’s developing approach to tokenized gold reflects both regulatory planning and competitive market strategy. London still dominates global gold trading by notional volume, but pressure from China is adding urgency to efforts that could help preserve that lead. By consulting financial institutions, the regulator is testing how tokenized gold might fit into wholesale finance and whether it could be used as collateral under a clearer rule set. The initiative also sits within a wider U.K. push to modernize financial markets through tokenization, with officials arguing that faster digitization could bring meaningful economic benefits in the years ahead.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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