The UK Financial Conduct Authority (FCA) is exploring how tokenised gold could be used as collateral in wholesale financial markets, in discussions with major banks and other industry participants. The initiative forms part of a wider UK effort to modernise financial-market infrastructure through tokenisation, while also seeking to strengthen London’s position as a leading global bullion centre. People familiar with the discussions say the FCA is gathering industry feedback ahead of possible regulatory standards in the coming months.
Why Is the FCA Looking at Tokenised Gold?
Tokenised gold refers to digital tokens representing ownership rights or claims connected to physical gold held in custody. Instead of transferring bullion physically, ownership or economic rights can be represented and transferred through digital-ledger technology.
The FCA’s interest is focused particularly on wholesale financial markets, where tokenised gold could potentially be used as collateral for transactions. The regulator has been discussing the issue with market participants, including major banks, as it considers how existing rules could accommodate the emerging structure.
The initiative is significant because collateral is a central component of modern financial markets. If digital representations of physical gold can be transferred and pledged efficiently, firms could potentially reduce some of the operational friction associated with moving, recording and settling traditional assets.
However, regulatory recognition would depend on issues including legal ownership, custody arrangements, valuation, redemption rights and the ability to enforce claims if a counterparty defaults.
How Could Tokenised Gold Be Used as Collateral?
Tokenised gold could allow financial institutions to pledge digital representations of vaulted bullion without physically moving the underlying bars. The World Gold Council describes tokenised gold as a digital representation of gold or rights relating to gold, with structures varying according to ownership, transfer and redemption arrangements.
For wholesale markets, this could make collateral more mobile. A token could potentially be transferred between eligible parties through digital infrastructure while the underlying gold remains securely stored with a custodian.
The potential benefits include faster settlement, improved transparency and more efficient collateral management. Tokenisation may also allow financial firms to integrate gold with other digitally represented assets and automated processes.
Yet the technology does not remove traditional financial risks. The legal relationship between the token holder, issuer and custodian would remain critical. Market participants would also need confidence that the physical gold genuinely exists, is adequately protected and cannot be pledged multiple times.
What Is the FCA Considering for Wholesale Markets?
The FCA is considering how tokenised assets could fit within the existing UK regulatory framework rather than simply treating blockchain-based instruments as a separate financial category.
A joint FCA and Bank of England consultation on the future of tokenisation has already identified tokenised collateral as an area requiring further policy development. The authorities said tokenised versions of assets already accepted as regulatory collateral could potentially qualify, provided the risks associated with the tokenisation arrangements are appropriately controlled.
The FCA and Prudential Regulation Authority are also examining the eligibility of tokenised collateral, including tokenised gold, for uncleared over-the-counter derivatives markets. The Bank of England said further policy considerations on tokenised collateral are expected later in 2026.
This suggests that the latest discussions about tokenised gold form part of a broader regulatory programme rather than an isolated experiment.
Why Does Tokenised Gold Matter for London’s Bullion Market?
The development comes as London seeks to maintain its importance in global gold trading while financial centres in Asia expand their bullion capabilities.
London remains a major global centre for wholesale gold trading, but competition from hubs including Shanghai and Hong Kong has increased. The push towards digital infrastructure could therefore have strategic importance beyond the technology itself.
Tokenisation could allow London’s established bullion infrastructure to connect more effectively with digital financial markets. If widely adopted, this could make gold easier to transfer, finance and use within increasingly digital institutional trading systems.
The UK’s broader tokenisation strategy is similarly aimed at ensuring that traditional financial assets can operate on modern digital infrastructure without losing established legal and regulatory protections.
What Are Banks and Financial Institutions Already Doing?
Banks and financial institutions globally have already begun experimenting with tokenised gold.
In June 2026, Singapore-based DBS announced plans to offer tokenised physical gold to retail customers through its digital banking application. Each DBS Physical Gold Token is designed to represent one gram of gold stored in a dedicated vault in Singapore, with the bank also considering access for accredited investors and institutions.
Other financial-market experiments have focused specifically on collateral. In April, MetaComp said it had completed a proof-of-concept involving lending against Tether Gold, with a US$300,000 XAUT-collateralised lending test.
These developments demonstrate why regulators are increasingly examining how tokenised commodities could interact with established financial markets.
What Risks Could Regulators Need to Address?
The principal challenge is ensuring that a digital token provides sufficiently clear and enforceable rights over the underlying gold.
Custody is particularly important. Investors and financial institutions need assurance that physical bullion is properly allocated or otherwise legally connected to the digital claim. Independent verification of reserves, insurance, segregation and redemption arrangements could all become important regulatory considerations.
There are also questions around valuation and liquidity. A token may be technically transferable, but that does not automatically guarantee that it can be sold quickly at a fair price. The FCA’s Consumer Panel has warned that tokenised markets require reliable liquidity, price discovery, custody arrangements and clear consumer protections.
For institutional markets, operational resilience and legal enforceability would also be central. Regulators would need to establish what happens if a token issuer fails, a custodian becomes insolvent or digital infrastructure experiences an outage.
How Does This Fit Into the UK’s Wider Tokenisation Strategy?
The FCA’s work on tokenised gold is part of a much broader effort to bring traditional financial assets onto digital infrastructure.
The FCA and Bank of England have said that tokenised traditional assets should generally receive the same prudential treatment as their non-tokenised equivalents where legal rights are identical and underlying risks are comparable.
The authorities are also examining whether tokenised assets could eventually be accepted more widely as collateral and whether the Bank of England’s own systems could connect directly to digital-asset ledgers.
This approach indicates that UK regulators are attempting to encourage innovation while retaining existing safeguards around financial stability, collateral quality and investor protection.
What Could Happen Next With Tokenised Gold?
The FCA is expected to continue discussions with banks and other market participants before potentially setting out regulatory standards for tokenised gold. The precise timetable and scope of any eventual framework remain subject to further consultation and policy development.
For banks, asset managers and other institutional investors, the key issue will be whether tokenised gold becomes legally recognised and operationally practical as collateral within established wholesale markets.
If regulators can establish clear standards covering ownership, custody, valuation, settlement and default procedures, tokenised gold could become part of the UK’s evolving digital financial infrastructure. The wider implications could extend beyond gold, providing a regulatory model for other tokenised real-world assets.
The FCA’s discussions therefore mark an important stage in the UK’s attempt to combine London’s established bullion expertise with digital-market technology. While substantial legal and operational questions remain, developments expected over the coming months could determine whether tokenised gold moves from an emerging financial technology into a recognised component of wholesale collateral markets.
