FCA Drafts Tokenised Gold Rules to Defend London's 70% Share of Global Trading

The Financial Conduct Authority (FCA) is working on a regulatory framework for tokenised gold, approaching financial institutions to gather feedback on how digital tokens backed by physical bullion could function as collateral in wholesale markets. An announcement of progress on the broader tokenised digital assets ruleset is expected within the next few months, according to a Financial Times report citing people familiar with the plans.

London’s over-the-counter gold market currently accounts for 70% of global notional trading volume, according to the World Gold Council, but that position is under increasing pressure from China. The regulatory effort sits within a wider government push to digitise the country’s financial markets: Chris Woolard, the UK Treasury’s wholesale digital markets lead, set out a 12-month acceleration plan in July projecting a 33 billion pound (roughly 44 billion US dollar) annual uplift to economic output. The FCA and the Bank of England had already signalled their joint intent in May, with FCA markets executive director Simon Walls describing tokenisation as having the potential to transform how assets are issued, traded, and settled.

For operators active in gold financing and repo, the consultation phase represents a window to shape the collateral eligibility criteria before rules are finalised. The gold market context adds urgency: spot prices reached an all-time high of approximately 5,595 US dollars per troy ounce in January before retreating to around 4,340 US dollars, a range that makes the haircut and margin treatment of tokenised gold a non-trivial design question for any wholesale collateral framework.