UK FCA prepares tokenized gold framework with major banks

The U.K. Financial Conduct Authority is discussing standards for tokenized gold with major banks and other market participants, according to an Aug. 10 Financial Times report. 

The discussions are examining how digital representations of physical gold could operate in wholesale markets, including as collateral.

The talks have not yet produced a standalone FCA rulebook specifically for tokenized gold. They build on a May 18 joint policy paper from the FCA and Bank of England, including the Prudential Regulation Authority, which explicitly identified tokenized gold as a possible form of collateral for uncleared over the counter derivatives.

FCA tokenized gold plan builds on May roadmap

The May paper says the FCA and PRA are reviewing tokenized collateral eligibility and recognize potential benefits from tokenized money market funds and tokenized gold. Any use would be subject to standards developed with industry. Regulators also plan further policy later this year explaining how tokenized collateral can operate under the existing regulatory framework.

That points toward adapting existing wholesale market rules rather than automatically creating a separate regulatory category for each tokenized asset. The PRA has also said tokenized traditional assets should generally receive the same prudential treatment as conventional equivalents when their legal rights and underlying risks are comparable.

As crypto.news reported in earlier UK regulatory coverage, the broader initiative covers issuance, trading, settlement, collateral and the infrastructure needed to move tokenized finance beyond pilot projects.

Tokenized gold could enter wholesale collateral markets

The Bank of England plans to consider how tokenized versions of assets already accepted as regulatory collateral could qualify at central counterparties under UK EMIR. The FCA and PRA are separately examining tokenized gold for uncleared derivatives collateral.

There is already a precedent involving funds. An April FCA policy statement confirmed that a range of money market funds, including tokenized versions, can qualify as collateral for uncleared trades under UK EMIR. The same statement said authorized U.K. funds are not prevented from investing in tokenized forms of otherwise eligible assets.

The regulatory work therefore centers not only on whether an asset is digital, but whether its legal rights, custody arrangements and risks remain comparable with the conventional asset it represents.

London’s bullion position gives the project added weight

The Financial Times reported that London accounts for roughly 70% of global gold trading volume. It said the regulatory discussions come as London faces stronger competition from Asian financial centers seeking a larger role in bullion trading.

The size of the existing London market is substantial. LBMA data show London vaults held 9,339 tonnes of gold valued at about $1.384 trillion at the end of March. LBMA describes London as the center of the international bullion market.

The World Gold Council is also developing a wholesale digital gold structure known as Pooled Gold Interests. Its proposed model combines physical ownership with digital transfer and is aimed primarily at institutional and wholesale participants.

What happens next for UK tokenization rules

The FCA and Bank of England closed their broader tokenization consultation on July 3. Their published timetable calls for industry workshops, a response statement during the summer and a full cross authority roadmap later in 2026. The Financial Times now reports that an announcement on developing tokenized gold standards is expected within the next few months, citing a person familiar with the FCA’s plans.

Infrastructure work is advancing alongside those rules. Sixteen firms are working through the Digital Securities Sandbox, while the Bank of England plans upgrades to its securities and collateral system in 2027. It is also targeting 2028 for a synchronization service connecting digital asset ledgers with sterling central bank money.

In related coverage, crypto.news reported on the UK digital gilt rollout, which is targeting its first transaction by the end of Q1 2027 using HSBC’s Orion platform.

The next step for gold is therefore regulatory detail. Authorities still need to determine standards covering eligibility, legal ownership, custody and risk before tokenized gold can become a routine source of collateral across U.K. wholesale markets.