UK FCA Considers Gold Tokenization Assets as Collateral in Wholesale Markets

The UK Financial Conduct Authority (FCA) is reviewing whether gold tokenization assets can be used as collateral in the wholesale financial market. The idea of introducing a separate regulatory framework or partial fund regulation exemptions for gold tokenization products has not been confirmed in official documents. In a joint consultation paper, the FCA and Bank of England mentioned using tokenized money market funds and gold as collateral for non-cleared over-the-counter derivatives. Both institutions stated that industry standards must be established to manage related risks.

Finance Magnates reported citing World Gold Council data that London accounts for approximately 70% of global gold trading volume. The Bank of England plans to further examine whether tokenized collateral can expand the scope of assets recognized as collateral under existing regulations, provided they are digital forms of traditionally accepted collateral.