Key Takeaways
- FCA talks could bring tokenized gold into U.K. collateral markets as London handles 70% of global trading.
- HSBC’s $2.2B tokenized gold volume shows blockchain products could reshape bullion settlement.
- The FCA may issue rules within months as London faces competition from Shanghai and Hong Kong.
London Pushes Tokenized Gold as China Challenges Its Lead
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.
According to a report by the Financial Times, the Financial Conduct Authority has held early discussions with banks and other industry participants about how tokenized gold could be regulated and used in institutional markets.
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.
London Looks to Defend Its Gold Market Lead
The effort comes as China increases its ambitions in global bullion markets.
London currently accounts for about 70% of global gold trading volumes, according to the World Gold Council. However, Shanghai and Hong Kong are competing for a larger share of wholesale activity.
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.
Earlier this year, the FCA and the Bank of England’s Prudential Regulation Authority said they would publish further proposals on how tokenized collateral could operate within the existing regulatory framework.
Blockchain Push Extends Across UK Markets
Tokenized gold fits into a wider government effort to bring blockchain technology into trading, settlement, clearing and custody. The U.K recently published a joint statement with the U.S. on stablecoin rules to boost cross-border payments through their Transatlantic Taskforce for Markets of the Future.
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.
