UK regulator prepares tokenised gold framework for London bullion market

Traders Union
All News
Financial News
UK tokenised gold framework

Highlights

UK Financial Conduct Authority is preparing regulatory standards for tokenised gold, aiming to announce detailed plans in the coming months.
London handles 70 percent of global gold trading, but faces competitive pressure from Shanghai and Hong Kong to modernise via tokenisation initiatives.
HSBC's tokenised gold product in Hong Kong exceeded $2.2 billion in trades across 276,000 transactions, demonstrating significant commercial uptake for digital gold.

Regulatory plans for tokenised bullion

As first reported by Financial Times, the Financial Conduct Authority is discussing with industry participants, including large banks, how tokenised gold could be regulated to support growth in the market. The talks are part of broader UK efforts to modernise wholesale finance, and the regulator is seeking feedback on whether tokenised gold can be used as collateral in wholesale markets.

Tokenised gold refers to digital tokens that represent ownership rights in physical gold, with bullion held by the issuer as backing for those tokens. One person familiar with the plans says the FCA is expected to announce work on regulatory standards in the coming months, while discussions also cover how the watchdog could supervise the area given it does not regulate trading in physical gold, even though it oversees gold-linked derivatives and exchange-traded products listed on public markets.

The FCA declines to comment. Earlier this year, the FCA and the Bank of England’s Prudential Regulation Authority say they plan to set out further policy later this year on how tokenised collateral can operate under the existing regulatory framework.

Pressure on London’s market position

London accounts for about 70 per cent of global gold trading volumes, according to the World Gold Council, but China is seeking to build its own bullion hub. One person familiar with the discussions says there is strong competitive pressure from Shanghai and Hong Kong, and warns that other venues may move ahead if London does not modernise its market through measures including tokenisation.

The UK is seeking wider use of blockchain across financial markets to improve the speed, efficiency and security of trading, settlement, clearing and custody. Chris Woolard, the UK Treasury’s newly appointed wholesale digital markets champion, tells the FT that the country could gain a £33 billion economic boost if it accelerates digitisation plans.

Industry groups and market participants are already pointing to commercial potential for digital gold products. HSBC says that since launching a tokenised gold product for retail customers in Hong Kong just over two years ago, more than $2.2 billion has been traded across more than 276,000 transactions, while the World Gold Council says digital gold could remove constraints tied to bar sizes, vault locations and fragmented settlement mechanisms.

Our earlier coverage of Hong Kong’s Northern Metropolis redevelopment plan explained how the city is pushing a large-scale, infrastructure-led strategy to reshape its economy and tighten integration with the Greater Bay Area. We noted the project’s ambitious housing and business targets, alongside key concerns around funding, execution risks, and the challenge of staying competitive with nearby mainland hubs.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.