The UK Financial Conduct Authority is pursuing a regulatory framework for tokenized gold, aiming to use it as collateral in wholesale markets to reinforce London’s dominance in global bullion trading.

Tokenization creates digital tokens that represent ownership rights in physical gold, with the issuer backing the tokens with actual bullion.

Cointelegraph asked the FCA for comment on the potential tokenized gold framework and its plans.

The LBMA would play a central role in tracking adoption, with a shift to tokens expected to boost total trading volume while reducing traditional clearing as instant settlement becomes possible.

The plan fits into a broader UK push to digitize wholesale markets and modernize asset issuance, trading, and settlement.

The framework seeks to provide clarity for market participants while safeguarding consumer protection and financial stability amid the tokenized asset evolution.

This development aligns with ongoing coverage of tokenization in UK financial markets and its potential macroeconomic impact if adoption broadens.

Regulators are examining authentication, anti-money laundering controls, investor protections, and implications for market access and stability.

A move toward tokenized RWAs is expected to influence other jurisdictions, promoting a global shift to crypto-enabled infrastructure within traditional markets.

The initiative is part of the UK’s broader strategy to expand tokenized markets, including plans for the first tokenized government bond by early 2027 and potential GDP gains by 2035.

Currently, 16 UK institutions are piloting tokenization in regulatory sandbox, with forecasts of significant GDP impact by 2035 and interoperability with a digital pound by 2028; first tokenized government bond anticipated in early 2027.

The roadmap envisions the first tokenized UK government bond by early 2027 and aims for tokenized securities to be usable for trading, settlement, and collateral.