UK FCA Considers Exemption for Tokenized Gold

UK FCA considers exempting tokenized gold from fund regulations to unlock London bullion reserves as collateral

The UK Financial Conduct Authority is considering whether tokenized gold should be exempt from traditional fund regulations, according to the Financial Times as reported by Cointelegraph, as regulators examine ways to expand the use of digital assets in wholesale financial markets.

The proposal could allow tokenized gold products to operate outside certain collective investment scheme and alternative investment fund rules. The move is aimed in part at making it easier for gold held in London to be used as collateral in financial transactions.

FCA Explores Rules for Tokenized Gold

Under the proposal, the FCA is considering a regulatory approach specifically for tokenized gold or tokenized commodities. Tokenization represents physical assets through digital tokens, potentially allowing ownership and transfers to be recorded and processed through digital infrastructure.

The Financial Times reported that the FCA is examining whether existing UK fund regulations are appropriate for tokenized gold. The regulator is also considering a dedicated framework that could provide greater clarity for firms developing products backed by physical bullion.

No final decision has been made on the proposed exemption, according to the Financial Times.

The FCA has already been working on broader measures to support tokenization in UK financial markets. In April, the regulator published guidance on fund tokenization, including how firms can use distributed ledger technology within the existing regulatory framework.

Tokenized Gold Could Support Collateral Use

The proposal is particularly relevant to London's established bullion market. The reported objective includes making it possible for more of the city's gold reserves to be used as collateral.

The FCA and Bank of England have been examining the role of tokenization in wholesale markets, including the use of tokenized assets as collateral. In May, the two institutions published a joint vision seeking industry views on how tokenization could be adopted safely across UK wholesale financial markets.

The FCA has said tokenization could improve the efficiency of financial markets by creating digital representations of assets and their ownership. Its existing work includes efforts to support tokenized funds and other applications of distributed ledger technology.

UK Regulators Continue Tokenization Work

The consideration of tokenized gold forms part of a broader regulatory effort to establish clearer rules for digital representations of traditional financial assets.

The FCA's current work includes reforms covering fund tokenization, while the Bank of England is separately examining how tokenized assets could function within financial-market infrastructure. The FCA has emphasized that innovation must remain consistent with market integrity and consumer protection.

For tokenized gold specifically, the immediate question is whether the asset should remain subject to existing fund classifications or receive a more tailored regulatory treatment.

The Financial Times report cited by Cointelegraph indicates that the FCA is still exploring the approach, meaning the proposed exemption remains under consideration rather than being an established regulatory change.

writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.