The UK's top financial regulators are exploring a dedicated regime for tokenized gold, including possible exemptions from fund rules, as London's dominance in gold trading collides with the rise of blockchain-based commodities.
UK regulators are considering whether to introduce new rules for tokenized gold, a step that could change how digital commodities are handled in one of the world's main bullion markets. The Financial Conduct Authority (FCA), together with the Bank of England and HM Treasury, opened a public call for input on tokenized gold on September 14, 2026. They are asking the industry whether tokenization could improve trading, transfer, collateral, and storage of gold in UK markets. Submissions are due by October 23, 2026.
This review is part of a wider effort by the FCA and Bank of England to examine tokenization in UK wholesale markets. The current focus on gold comes after market participants responded to a joint consultation in May 2026. The FCA is now looking at whether tokenized gold products-blockchain tokens that represent ownership of physical gold held by a custodian-should fall under existing collective investment scheme and alternative investment fund rules, or if a separate regulatory approach is needed.
London accounts for approximately 70% of global notional volume in the over-the-counter gold market, making it the world's largest center for spot gold trading.
- World Gold Council
Legal uncertainty is a key issue. Without clear rules, companies developing tokenized gold products risk being misclassified by regulators, which can slow innovation and limit investor access. According to Reuters and PwC UK, the FCA is weighing options that include clarifying current rules, creating targeted exemptions, or setting up a dedicated regime for tokenized gold. This lack of clarity has already caused problems, with some investors unable to access tokenized gold products because of regulatory uncertainty.
London's leading role in global gold trading-handling about 70% of the world's notional OTC gold volume-makes it a natural place to test digital gold infrastructure. The FCA has said it wants to see if tokenization can make UK wholesale markets more efficient and competitive, while keeping the strengths of London's existing gold-market systems. One area of interest is using tokenized gold as wholesale collateral, which could open new liquidity options for institutional finance.
The FCA is also considering whether some fund rules could be relaxed for tokenized commodity products, which would be a notable change from current policy. The Bank of England is separately reviewing whether tokenized assets, including stablecoins, could be accepted as collateral under its Sterling Monetary Framework. If this happens, it would change how the central bank treats digital assets in its liquidity operations and could give tokenized gold a bigger role in wholesale finance. For more details, see the Reuters coverage.
The FCA's review focuses on tokenized gold products that provide clear ownership rights to physical gold held by a custodian, with transparent backing and robust redemption mechanisms. These features are central to the regulator's analysis of whether tokenized gold can safely serve as collateral and settlement assets in wholesale markets.
- PwC UK, Industry Analysis
No final decisions have been made, and the FCA has not set a timeline for regulatory changes. The review is part of a broader UK effort to update financial market infrastructure in response to digital asset developments, including recent work on stablecoin rules and testing digital pound compatibility with cross-border payments.
Firms working on tokenized gold are not alone in facing regulatory challenges. As digital versions of real-world assets become more common, regulators worldwide are trying to fit these products into existing legal frameworks. The UK's willingness to consider special rules for tokenized gold stands out compared to the more cautious approach in some other countries, where uncertainty has slowed similar products.
The overlap between traditional assets and digital tokens has already caused friction in other markets. As reported earlier, Tether's move into private credit markets with USDT-backed financing has raised questions about risk, transparency, and oversight-issues that also affect the tokenized gold discussion.
The World Gold Council reports that London's over-the-counter gold market is still the largest globally, with daily average trading volumes above $150 billion as of 2023. Tokenized gold products are a small part of this activity, but their potential to boost liquidity and collateral options has drawn interest from both institutional and retail investors.
Editorial analysis
The FCA's openness to exemptions for tokenized gold funds shows a practical understanding that digital assets do not always fit old regulatory categories. By looking at a custom regime, UK authorities are aiming to keep London competitive as blockchain-based commodities develop. But with no final decision, firms and investors are left waiting for regulatory clarity. The main challenge will be whether the FCA and Bank of England can create rules that support innovation while protecting investors, without moving risk into less regulated areas.
Tokenized gold is a type of real-world asset (RWA) tokenization, where a blockchain token represents a claim on physical gold held in custody. Tokenization can make assets easier to divide and transfer, but it does not remove legal, custody, or counterparty risks. How tokenized RWAs are regulated depends on how the asset is held, who controls the token, and what rights it gives. Without clear rules, investors and developers must navigate both traditional securities law and new digital-asset regulations, making mainstream adoption complex and dependent on the jurisdiction.
