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FCA Drafts Tokenized Gold Rules as China Challenges London
The FCA seeks feedback on tokenized gold as collateral. New rules expected within months as London's 70% gold market share faces Chinese competition.
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The U.K.'s Financial Conduct Authority is writing rules for tokenized gold, part of a push to keep London the world's top hub for the precious metal. The regulator approached financial institutions to explore regulations that would foster market growth, the Financial Times reported Monday, citing people familiar with the plans.
London's over-the-counter gold market handles about 70% of global notional trading volume, according to the World Gold Council. That dominance faces a rising challenge from China, which has been expanding its own gold trading infrastructure. The FCA sees tokenization as a way to modernize the market and maintain London's edge, according to the people familiar with the regulator's thinking.
Tokenized gold creates digital tokens that represent ownership of physical bullion held by the issuer. The FCA is seeking feedback on whether tokenized gold could serve as collateral in wholesale transactions, the report said. The regulator is expected to announce progress on drafting new rules for tokenized digital assets within the next few months.