UK FCA Eyes Tokenized Gold as London Defends 70% Market Share

The U.K.’s Financial Conduct Authority is exploring how tokenized gold could fit into wholesale markets, including its use as collateral. The discussions come as London seeks to defend its dominance in bullion trading against growing competition from China.

The United Kingdom is considering a regulatory framework for tokenized gold as policymakers look to modernize wholesale markets and protect London’s position at the center of global bullion trading.

Tokenized gold represents ownership rights in physical bullion through blockchain-based tokens. The underlying gold is typically held in custody by the issuer.

The FCA has been seeking industry feedback on whether such assets could be accepted as collateral in wholesale finance. A regulatory announcement could come within the next few months, according to people familiar with the discussions.

The effort comes as China increases its ambitions in global bullion markets.

The challenge for regulators is jurisdictional. The FCA does not oversee physical gold trading directly, although it regulates gold derivatives and exchange-traded products listed on public markets.

Commercial adoption is already emerging. HSBC launched a tokenized gold product for retail customers in Hong Kong more than two years ago. The bank said over $2.2 billion has since traded across more than 276,000 transactions.

The World Gold Council has argued that digital gold could remove constraints linked to bar sizes, vault locations and fragmented settlement systems. Gold itself remains volatile. Prices reached a record near $5,595 an ounce in January before retreating to about $4,380, as at Aug. 10.

For London, the regulatory question is becoming more strategic. Tokenization is no longer only about efficiency. It may also determine where the next generation of global gold trading takes place.