The UK Financial Conduct Authority is holding discussions with major banks and other market participants on standards for tokenized gold. The talks center on how digital versions of physical gold could function in wholesale markets, particularly as collateral.

These conversations have not yet resulted in a dedicated rulebook for the asset class. Instead, they build on a joint policy paper issued in May by the FCA and the Bank of England, including the Prudential Regulation Authority. That document identified tokenized gold as a possible form of collateral for uncleared over-the-counter derivatives.

Focus on Collateral and Existing Rules

Regulators are examining whether tokenized gold can meet eligibility requirements under current frameworks. The Prudential Regulation Authority has indicated that tokenized traditional assets should generally receive the same prudential treatment as their conventional counterparts when legal rights and underlying risks remain comparable.

The Bank of England is separately considering how tokenized versions of assets already accepted as regulatory collateral might qualify at central counterparties under UK EMIR rules. The FCA and PRA are reviewing tokenized gold specifically for uncleared derivatives.

An earlier FCA policy statement in April confirmed that certain money market funds, including tokenized versions, can serve as collateral for uncleared trades. Authorized UK funds are not barred from investing in tokenized forms of otherwise eligible assets. The work therefore focuses on legal ownership, custody arrangements and risk profiles rather than the digital format alone.

London’s Role in Global Gold Trading

London accounts for roughly 70 percent of global gold trading volume. The city’s position as the leading over-the-counter gold market gives the regulatory discussions added significance, particularly as other financial centers seek a greater share of bullion activity.

Data from the London Bullion Market Association show that London vaults held 9,339 tonnes of gold valued at about $1.384 trillion at the end of March. The World Gold Council is developing a wholesale digital gold structure known as Pooled Gold Interests, combining physical ownership with digital transfer for institutional participants.

Broader Tokenization Push

The tokenized gold initiative forms part of a wider UK effort to develop tokenized financial markets. A government-backed industry task force projected in July that asset tokenization could add £33 billion, or about $44 billion, to the UK’s annual economic output by 2035.

That roadmap includes the issuance of the country’s first tokenized government bond by early 2027 and aims to enable tokenized securities for trading, settlement and collateral use within existing infrastructure. Sixteen firms are already participating in the Digital Securities Sandbox, testing live tokenized asset arrangements.

The FCA and Bank of England closed a broader consultation on tokenization on July 3. Their timetable includes industry workshops, a response statement during the summer and a full cross-authority roadmap later in 2026. An announcement on developing tokenized gold standards is expected within the next few months.

Infrastructure development continues in parallel. The Bank of England plans upgrades to its securities and collateral system in 2027 and is targeting 2028 for a synchronization service linking digital asset ledgers with sterling central bank money.

Authorities still need to finalize standards covering eligibility, legal ownership, custody and risk management before tokenized gold can become a routine form of collateral across UK wholesale markets.