UK Moves to Greenlight Tokenized Gold, FCA Considers Exempting It from Traditional Fund Regulations

September 14: The UK Financial Conduct Authority (FCA) is exploring the development of a dedicated regulatory framework for tokenized gold and considering excluding it from existing fund regulatory rules, in order to promote the digitization of the gold market and consolidate London's position as the global gold trading hub.

The FCA stated that tokenized gold is becoming an area of industry focus, and whether the existing regulatory framework applies to the gold market warrants reassessment. Tokenized gold is typically a digital asset issued by an issuer and backed by physical gold, with holders possessing ownership rights to the corresponding physical gold.

The London over-the-counter gold market currently accounts for approximately 70% of global notional trading volume, but it is facing competition from markets such as China. The FCA believes that gold tokenization has the potential to improve the efficiency of transferring and using gold in digital markets, especially for wholesale market collateral, while also potentially giving rise to new retail investment products.

This exploration is part of the UK's strategy to promote the tokenization of financial markets. In July of this year, the UK and the US proposed plans to coordinate the regulation of tokenized financial products, and the Bank of England and the FCA are also advancing the application of tokenization technology to financial infrastructure.