The UK Financial Conduct Authority is considering a targeted regulatory exemption for certain tokenized gold products from existing collective investment scheme and alternative investment fund rules. The move forms part of joint work with the Treasury and Bank of England on how digital representations of physical bullion could function more efficiently in wholesale markets.
No final decision has been taken. Regulators are examining whether a dedicated framework for tokenized gold or broader tokenized commodities is needed.
The Drivers of This Review
Tokenized gold creates digital tokens that represent ownership of physical bullion held in vaults, allowing easier division, transfer and use as collateral without moving the underlying metal. Industry participants have highlighted uncertainty over whether such products fall under restrictive fund rules as a potential barrier to development. The FCA, working with the Treasury and Bank of England, is assessing options including a specific exemption from the CIS and AIF perimeter for certain gold tokens or related market infrastructure. For perspective, the review aims to support faster, cheaper settlement and greater flexibility in London’s bullion market while maintaining investor protection and market integrity.
It is important to note the fundamental difference between applying existing fund regulations designed for pooled investment vehicles and creating tailored treatment for tokenized representations of a physical commodity that already trades in large volumes outside traditional fund structures.
Impact and Broader Context
A clearer or lighter regulatory path could encourage greater institutional use of tokenized gold as collateral and help reinforce London’s position in global precious-metals markets amid competition from other centres. This development sparks important discussions about how far regulators should adapt traditional rules to accommodate blockchain-based versions of real-world assets. Supporters argue that appropriate exemptions would unlock efficiency gains and innovation without compromising core protections. Critics caution that any carve-out must carefully address custody, ownership rights, redemption and systemic risks. Analysts observe that the work aligns with broader UK efforts to modernise wholesale market infrastructure and explore tokenised assets, including potential eligibility as collateral under the Bank of England’s Sterling Monetary Framework.
The FCA is expected to seek further views, with a feedback deadline noted in related announcements. This analysis is based on FCA statements and reporting from crypto.news, the Financial Times and Reuters for accuracy and reliability. Any policy changes remain subject to ongoing consultation and formal decision-making.