The UK Financial Conduct Authority is preparing a regulatory framework for tokenized gold that represents ownership rights in physical bullion.
London faces rising competition in gold trading from Asian hubs, specifically Shanghai and Hong Kong, which are expanding their physical trading and clearing infrastructure.
The Financial Conduct Authority and the Bank of England are reviewing the eligibility of tokenized gold to be used as uncleared over-the-counter derivatives collateral.
The Financial Conduct Authority has held early discussions with major banks and industry bodies regarding regulatory approaches for tokenized gold.
London accounts for approximately 70 percent of global gold trading volumes, making it the dominant international wholesale bullion hub.
A UK government-backed industry task force estimates that accelerating financial market digitization could boost the UK's annual economic output by £33 billion by 2035.
An official announcement on drafting the regulatory standards for tokenized gold is expected from UK authorities within the next few months.
The Financial Conduct Authority does not directly regulate physical gold trading in Britain, but it maintains jurisdiction over gold-related financial derivatives and exchange-traded products.
Sixteen financial institutions are currently testing live tokenized asset infrastructure through the UK's Digital Securities Sandbox.
The UK is targeting the launch of its first tokenized government bond, or digital gilt, by early 2027.
Hong Kong is building a government-owned gold-clearing system run by the Hong Kong Precious Metals Central Clearing Company, targeting a July 2026 launch.
HSBC's existing retail tokenized gold product in Hong Kong has processed more than $2.2 billion across over 276,000 transactions since its launch.
