UK Regulator Pushes Tokenized Gold as Wholesale Collateral

This push is part of a broader UK effort to modernize financial market infrastructure through tokenization. The Bank of England and other regulatory bodies have endorsed controlled experiments with tokenized instruments. Their goals include faster issuance, trading, settlement, and collateral deployment.

Sixteen financial institutions are currently testing tokenized securities through Britain’s Digital Securities Sandbox, which allows supervised trials under real market conditions. Approved investment funds can now allocate capital to tokenized versions of qualifying instruments.

The government plans to issue its first tokenized bond before early 2027. Officials envision tokenized securities supporting full trading, settlement, and collateral operations across regulated venues. The FCA’s approach to gold could extend that framework into London’s large bullion market.

London remains the world’s largest over-the-counter center for gold trading, handling about 70% of global notional volume, according to industry data. That position is pushing Britain to upgrade bullion infrastructure as Asian centers like Hong Kong and Shanghai expand their capabilities. Major financial institutions have already launched tokenized gold offerings for clients in Asian markets.

A government-backed task force projects tokenization could add £33 billion to Britain’s annual economic output by 2035. The FCA positions regulated digital markets as central to the country’s financial competitiveness. Both the FCA and the Bank of England continue developing infrastructure to support broader tokenized market participation.