The Financial Conduct Authority is considering a bespoke regulatory regime for tokenised gold, potentially exempting it from UK fund rules. This initiative, developed with the Treasury and Bank of England, aims to strengthen London’s position as a global bullion hub. Tokenised gold represents ownership of physical gold held by issuers, offering a digital alternative to traditional assets.

The FCA believes tokenisation could unlock London’s bullion reserves as collateral, improving market efficiency. Industry participants fear current Collective Investment Scheme (CIS) or Alternative Investment Fund (AIF) rules might restrict investor access. The regulator may introduce targeted exemptions for tokenised gold products or market infrastructure.

The UK dominates global gold trading at about 70% of volumes, but faces rising competition from China. Jon Relleen, FCA director of infrastructure and exchanges, emphasized the need to assess whether existing frameworks fit evolving gold markets. The proposals are part of a broader push to tokenise wholesale financial markets.

Separately, the FCA and Bank of England will highlight opportunities to free capital through improved post-trade operations like clearing and settlement. The BoE is considering tokenised assets, including stablecoins, as eligible collateral in its Sterling Monetary Framework and will consult on allowing central counterparties to accept tokenised assets.