UK FCA Advances Tokenized Gold Framework Amid Broader Push for Digital Asset Modernization

The UK Financial Conduct Authority (FCA) is developing regulatory standards for tokenized gold, according to reports citing people familiar with the matter and direct FCA comments. The initiative involves talks with banks and industry participants on rules for digital representations of physical gold, including its potential use as collateral in wholesale markets. This effort aims to modernize London's position as the world's largest OTC gold trading hub, which handles about 70% of global notional volume, amid competition from Shanghai and Hong Kong. The FCA has sought feedback on tokenized gold standards, with plans to outline new rules in coming months. This aligns with a government-backed task force roadmap projecting up to £33 billion ($44 billion) in annual economic output from tokenization by 2035, including the UK's first tokenized government bond targeted for early 2027. The World Gold Council has highlighted how digital gold could remove constraints from physical bar sizes, vault locations, and fragmented settlements. While the primary driver is market efficiency and competitiveness, tokenization of commodities like gold could offer indirect resilience benefits against physical supply chain disruptions—such as record-low Rhine River levels that have hampered raw material transport to major European industrial sites including steel plants—by enabling more flexible, location-independent ownership and collateral use without relying solely on physical logistics.