The UK is considering new rules for tokenized gold as London faces rising competition from Asian bullion centers. The Financial Conduct Authority (FCA) has consulted major financial firms about regulating blockchain-based gold products. The discussions also examine whether tokenized gold could serve as collateral in wholesale markets.
London Seeks a Digital Edge
Tokenized gold links digital tokens to physical bullion held by an issuer. This structure could allow investors to transfer ownership without moving gold between vaults. Besides, blockchain systems could streamline trading, settlement, clearing, and custody across financial markets.
However, London faces growing pressure from Shanghai and Hong Kong to strengthen their bullion markets. Shanghai Gold Exchange and Hong Kong authorities continue developing infrastructure for international gold trading. Consequently, London wants to modernize its market while preserving its global position.
Regulators Prepare Wider Framework
Additionally, the FCA and Bank of England’s Prudential Regulation Authority plan further work on tokenized collateral. The regulators expect to develop additional policy later this year.
Moreover, broader adoption could improve transaction speed and reduce operational friction. Significantly, clear regulation could give financial institutions greater confidence when adopting blockchain-based gold products.
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