Britain Races to Tokenise Gold as China Closes In on London's Trade

The FCA is drafting rules for tokenised gold

The Financial Conduct Authority (FCA) is preparing rules for tokenised gold as part of its digital asset strategy. The regulator has approached major banks and other market participants to discuss how the asset could work in the UK's wholesale markets, the Financial Times reported. Tokenised gold is a digital token that represents ownership of physical bullion. The FCA is expected to set out progress on standards within the next few months.

Regulators weigh gold tokens as market collateral

A central question is whether tokenised gold can serve as collateral in wholesale markets. The FCA and the Prudential Regulation Authority (PRA) are reviewing whether it should count as margin on uncleared over-the-counter (OTC) derivatives. The FCA does not regulate physical gold trading, but it does write rules for gold derivatives and exchange-traded products. Regulators must decide how existing rules apply when bullion is represented by a blockchain token.

London handles most of the world's gold trade

London's over-the-counter market accounts for about 70% of the world's notional gold trading volume, according to the World Gold Council. Britain wants to protect that lead as competition grows from China and other Asian centres. Hong Kong began clearing bullion in July. UK officials present tokenisation as a way to keep London at the front of global wholesale markets.

The plan builds on a wider tokenisation strategy

The gold work builds on a joint call for input from the FCA and the Bank of England, published on 18 May 2026, which named tokenised gold as a possible form of collateral. Responses to that paper closed on 3 July 2026. The UK Treasury's wholesale digital markets lead, Chris Woolard, set out a 12-month plan in July to speed up the digitisation of financial markets. Officials project the effort could add £33 billion ($44 billion) to annual economic output. The two authorities plan to finalise a roadmap by the end of 2026 and to consult on most rule changes in 2027.

Live testing already runs through a regulated sandbox

The regulators are testing tokenised markets in practice, not only on paper. Sixteen firms are working through the Digital Securities Sandbox, a regulated environment for issuing, trading and settling tokenised securities. In April 2026, the FCA published a policy statement setting a framework for fund tokenisation. The PRA has also said tokenised traditional assets should, in general, receive the same treatment as their conventional equivalents when the legal rights and risks match.

Tokenised gold trades near record levels

Demand for tokenised gold has tracked a strong run in the metal itself. PAX Gold (PAXG), a token backed by physical bullion, traded at $4,328.73 at the time of publication, up 7.4% over the past seven days (CoinPaprika, 10 August 2026). Gold has held near record levels through 2026.

"Tokenisation has the potential to transform wholesale markets – reshaping how assets are issued, traded and settled", 18 May 2026. — Simon Walls, Executive Director of Markets, Financial Conduct Authority

The FCA declined to comment on the private talks, the Financial Times reported. Standards covering custody, ownership and settlement remain to be set before tokenised gold can become a routine source of collateral in UK wholesale markets.

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