Gold has always been physical, heavy and slow to move. But UK regulators think that could soon change for parts of the wholesale bullion market, and the shift could redraw how UK tokenised gold regulation takes shape over the next year. The Financial Conduct Authority is preparing to explore a bespoke regulatory framework for tokenised gold, and possibly other tokenised commodities, as it looks at whether digital tokens backed by physical bullion deserve their own rulebook rather than being squeezed into existing fund regulations.

Key takeaways

• The FCA is exploring a dedicated regulatory framework for tokenised gold and potentially other tokenised commodities.
• UK authorities may grant targeted exemptions from collective investment scheme and alternative investment fund rules for certain tokenised gold products.
• Tokenised gold represents ownership of physical bullion held by an issuer, transferred digitally between investors.
• The Bank of England is reviewing whether tokenised assets, including stablecoins, could count as collateral under its Sterling Monetary Framework.
• Citing data from the World Gold Council, roughly 70% of worldwide wholesale gold trading volumes pass through the UK, though China’s rising presence is intensifying competitive pressure.

UK Plans Bespoke Regulatory Framework for Tokenised Gold

The FCA is preparing to set out proposals, working alongside the Treasury and the Bank of England, that could give tokenised gold its own tailored set of rules rather than treating it as an extension of existing fund products. The plan reflects a broader push to keep London competitive as digital tokens increasingly represent ownership of real-world assets like bullion.

FCA’s Exploration of Tokenised Commodities Framework

Regulators want to know whether the UK’s current rulebook still fits gold markets built around physical storage, custody and manual transfer processes. The Financial Conduct Authority plans to examine whether tokenised gold, and tokenised commodities more broadly, need a dedicated framework distinct from the rules governing traditional investment funds. That work is expected to sit alongside a parallel review of how tokenisation could reshape wholesale market infrastructure more generally, including securities and settlement systems.

Consideration of Exemptions from CIS and AIF Rules

One option on the table is a targeted exemption for certain tokenised gold products from the collective investment scheme and alternative investment fund regimes. Industry participants have told the FCA that uncertainty over whether these products fall under CIS or AIF rules could limit which investors are able to access them. The regulator may work with the Treasury on a narrow carve-out for selected products or gold market infrastructure, though officials stress no decision has been made yet. The FCA is expected to set out its proposals alongside the Treasury and the Bank of England, giving the market a clearer picture of how the rules might change.

Definition and Industry Discussion on Tokenised Gold

Tokenised gold is, at its core, a digital claim on physical metal sitting in a vault somewhere in London. Understanding that distinction matters because it explains why regulators are treating it differently from ordinary crypto tokens.

Tokenised Gold as Digital Ownership of Physical Bullion

Tokenised gold represents ownership of physical bullion through digital tokens issued by a custodian or issuer, while the underlying metal stays in storage. Investors can trade or transfer the token without touching the physical bar, which regulators see as a way to make bullion easier to divide and move across digital markets. Unlike shares or bonds, which already run through established electronic systems, gold remains a physical asset with real operational demands around storage and custody, and that gap is exactly what the FCA’s review is trying to close.

Jon Relleen’s Views on Regulatory Review

Jon Relleen, the FCA’s director of infrastructure and exchanges, said tokenised gold has become a recurring topic in the regulator’s conversations with the industry. He noted that the FCA wants to understand whether existing frameworks remain the right fit for gold markets, and whether innovation could strengthen the efficiency and competitiveness of UK markets. That comment signals the review isn’t just a compliance exercise — it’s about whether London keeps pace as bullion trading goes digital elsewhere.

Supporting London’s Bullion Market and Improving Financial Infrastructure

London’s dominance in physical gold trading is exactly why this review carries weight beyond the UK. Regulators are betting that tokenisation could help defend that position rather than erode it, while also making collateral and settlement processes faster across the wider financial system.

UK’s Dominance in Global Gold Trading and Competition from China

Figures from the World Gold Council indicate that around 70% of global wholesale gold trading volumes flow through the UK, positioning London as the foremost global hub for bullion trading and custody services. That lead is not guaranteed to last. China has been working to expand its own role in the bullion market, and UK authorities are studying whether tokenised gold could keep London’s reserves easier to use in transactions, supporting faster movement of assets between financial institutions while keeping each digital token linked to real physical gold.

Beyond trading access, regulators are also examining whether tokenisation could improve clearing, settlement and the movement of financial collateral more broadly. The idea is that digital tokens representing bullion, securities or other assets could move between institutions with less friction than today’s manual processes allow, freeing up capital that currently sits idle as a buffer against operational delays.

Bank of England’s Review of Tokenised Assets as Collateral

Under its Sterling Monetary Framework—the mechanism it uses to extend funding to qualifying financial institutions—the Bank of England is examining whether tokenised assets, stablecoins included, might be accepted as collateral. Later this year, the central bank intends to launch a separate consultation on whether central counterparty clearing houses should be permitted to take tokenised assets as collateral. This work runs in parallel with the FCA’s tokenised gold review, and together the two efforts point toward a UK financial system that is quietly rebuilding its plumbing around digital representations of real assets.

Why does this matter beyond London’s trading desks? If tokenised bullion and other digital assets gain formal recognition as collateral, it could change how quickly banks and clearing houses can access liquidity, and it could set a template other jurisdictions watch closely as they weigh their own approach to digital commodities.

FAQ

What is tokenised gold according to UK regulators?

With tokenised gold, digital tokens serve as proof of ownership over physical bullion held by an issuer, enabling that ownership stake to change hands electronically even as the actual metal remains securely stored.

Why is the FCA considering a bespoke regulatory framework for tokenised gold?

The FCA aims to determine whether existing UK regulations are still fit for purpose when it comes to gold trading and the systems supporting it, balancing the potential efficiency and competitive gains from innovation against the risk of leaving investors uncertain about how they are regulated.

How could tokenised gold impact London’s position in the global bullion market?

Tokenised gold could make bullion reserves easier to divide and transfer, supporting faster asset movement between institutions and helping London defend its dominant role as competition from centres like China increases.

Is the Bank of England involved in the regulation of tokenised gold?

Yes. The Bank of England is reviewing whether tokenised assets, including stablecoins, could qualify as collateral under its Sterling Monetary Framework, work that runs alongside the FCA’s separate review of tokenised gold rules.

Article produced with the assistance of artificial intelligence and reviewed by the editorial team.