UK regulators are preparing a framework for tokenized gold as London looks to modernize its bullion market and defend its position against growing competition from Asian financial hubs.
The Financial Conduct Authority has held early discussions with banks and other industry participants on how tokenized gold could be regulated, the Financial Times reported, citing people familiar with the plans.
The talks include how digital gold could be used as collateral in wholesale markets, with the FCA expected to provide more detail on possible regulatory standards in the coming months.
London weighs digital shift in gold trading
The discussions form part of a broader UK effort to bring blockchain technology into wholesale financial markets, where regulators are exploring ways to improve the speed and efficiency of trading, settlement and custody.
London remains the world’s dominant gold trading centre, accounting for about 70% of global volumes, according to the World Gold Council. However, pressure is growing from Shanghai and Hong Kong as China pushes to expand its role in international bullion trading.
China has accelerated its bullion push through Hong Kong, which in July launched a central gold clearing system and a “Delivery Connect” link with the Shanghai Gold Exchange for cross-border settlements. The city also revived dollar gold futures, is considering yuan-denominated contracts and aims to expand storage capacity above 2,000 tonnes by 2030.
The FCA does not currently regulate physical gold trading, creating questions over how tokenized products would fall within its oversight. It already supervises some gold-linked derivatives and exchange-traded products.
The move adds to wider UK efforts to establish rules for tokenized collateral, with regulators previously signaling plans to clarify how such assets could operate within the existing financial framework later this year.
Tokenized gold draws wider institutional interest
The new framework comes amid a wider push globally to bring gold onto digital rails, with banks and crypto companies expanding their presence in the market.
Singapore’s DBS plans to launch tokenized physical gold for retail customers in the second half of 2026, with each token backed by one gram of bullion held in its vaults.
Similarly, the World Gold Council is developing shared infrastructure aimed at making digital gold products easier to issue, trade and use as collateral.
Tether, meanwhile, remains one of the sector’s biggest names, with its Tether Gold product, XAUT, backed by about 22 tonnes of physical gold worth $2.84 billion at the end of June, while customer holdings rose 9.5% during the second quarter.
