FCA Drafts Regulatory Framework for Tokenized Gold

The Financial Conduct Authority is drafting a regulatory framework for tokenized gold to ensure London remains the world's leading gold trading hub. The regulator is currently consulting with banks and financial institutions to determine how digital tokens representing physical bullion can be utilized as collateral within wholesale markets.

This initiative is part of a broader digital asset strategy designed to modernize financial markets and counter increasing competition from China. A government-backed roadmap indicates that tokenization could increase the United Kingdom's annual economic output by 33 billion pounds by 2035.

As part of this modernization effort, the government plans to launch the country's first tokenized government bond by early 2027. This move aims to transform the processes by which assets are issued, traded, and settled in the wholesale sector.