London's Bullion Crown Under Pressure The UK's Financial Conduct Authority (FCA) is developing a regulatory framework for tokenized gold, consulting major banks on standards for gold-backed d
The UK's Financial Conduct Authority (FCA) is developing a regulatory framework for tokenized gold, consulting major banks on standards for gold-backed digital tokens that could serve as high-quality collateral in wholesale markets. The move is part of a broader effort to modernize London's financial infrastructure and protect its commanding position in global bullion trading.
According to reports citing the Financial Times, the FCA is considering tokenized gold as collateral in uncleared over-the-counter derivatives markets, with regulators working through questions around custody, ownership verification, and settlement before any formal standards are set.
London currently handles roughly 70% of global gold trading volumes, according to World Gold Council figures. But that dominance is increasingly contested. The Shanghai Gold Exchange, working in tandem with Hong Kong, has emerged as a central force in physical bullion delivery and storage, with Hong Kong's financial secretary stating that "the centre of gravity in gold trading is shifting eastward."
Tokenized gold involves issuing digital tokens backed by physical bullion, with the aim of removing the friction created by physical bar sizes and fragmented settlement processes. A digital claim on vaulted gold could be transferred and tracked on a ledger while maintaining its link to the underlying metal, making it far more flexible as institutional collateral.
The gold initiative fits within a much larger UK agenda. Earlier this year, the FCA and the Bank of England published a joint call for input setting out a shared vision for tokenization in UK wholesale financial markets, with a feedback statement expected over the summer and a full cross-authority roadmap planned for later in 2026. Sixteen firms are already participating in the live Digital Securities Sandbox, testing tokenized asset infrastructure in real conditions.
A government-backed task force estimates that tokenization could add £33 billion to UK GDP by 2035, underscoring why regulators are moving with urgency on standards that could determine whether London or its Asian rivals set the terms for the next generation of gold markets.
Sources:Bank of England: FCA and BoE set out shared vision for tokenisation in UK wholesale marketsCrypto News: UK FCA prepares tokenized gold framework with major banksAsia Times: Gold's center of gravity moving from West to East
