UK FCA prepares tokenized gold framework with major banks

The U.K. Financial Conduct Authority (FCA) is actively engaging with major banks and market participants to establish a regulatory framework for tokenized gold. These discussions focus on integrating digital representations of physical gold into wholesale markets, specifically as collateral for uncleared over-the-counter derivatives. This initiative builds upon a May 18 joint policy paper from the FCA and the Bank of England, which recognized the potential benefits of tokenized gold and money market funds. Rather than creating a separate regulatory category, regulators aim to adapt existing wholesale market rules to ensure tokenized assets receive comparable prudential treatment to their conventional counterparts. With London accounting for approximately 70% of global gold trading volume, the move is seen as a strategic effort to maintain the city's competitive edge against rising Asian financial centers. The World Gold Council is simultaneously developing a wholesale digital gold structure known as Pooled Gold Interests to facilitate institutional adoption. While no standalone rulebook exists yet, an announcement regarding these standards is expected within the coming months as part of a broader roadmap for tokenized finance.