The U.K. Financial Conduct Authority is discussing a framework for tokenized gold with major banks and other market participants as it examines how digital claims on physical gold could function in wholesale finance.
The work includes possible use of tokenized gold as collateral, including in uncleared over-the-counter derivatives, and sits within a wider push to test tokenized asset infrastructure under existing U.K. market rules.
Focus on collateral use cases
According to the source report, regulators are assessing whether tokenized gold can be used as collateral in wholesale markets rather than treating it as a standalone retail product. One area under consideration is uncleared OTC derivatives, where collateral arrangements are already a central part of market practice.
The FCA is also working on industry standards for tokenized collateral use cases, suggesting the current effort is aimed at defining how such assets could be recognized and handled within established market structures.
Sandbox activity already underway
The policy work is taking place alongside live testing in Britain’s Digital Securities Sandbox. Sixteen firms are already participating in that program to trial tokenized asset infrastructure in a controlled environment.
That broader initiative covers several parts of the market process, including issuance, trading, settlement, collateral, and the supporting infrastructure needed to make those functions work in practice.
Why gold matters in London
The discussions carry added weight because London accounts for about 70% of global gold trading, according to the source article. That position means any standards developed in the U.K. for tokenized gold could be closely watched across wholesale markets tied to the metal.
At the same time, the report does not say that tokenized gold has been approved for routine use. The current stage is described as exploratory, with regulators and market participants still working through how the model would fit into existing rules.
What the FCA plans next
Further policy detail is expected later this year. The planned guidance is set to explain how tokenized collateral could operate within the current regulatory framework rather than through an entirely separate regime.
Before tokenized gold can become a regular source of collateral in U.K. wholesale markets, regulators still need to address standards around eligibility, legal ownership, custody, and risk. Those issues are presented in the report as the next confirmed steps in moving from testing and discussion toward routine market use.
Source: crypto.news