The Financial Conduct Authority (FCA) is weighing a significant regulatory change that would move tokenized gold outside the restrictive UK fund rulebook. By reclassifying these digital assets, the regulator aims to treat tokenized bullion as a direct commodity holding rather than a traditional managed fund. This shift is expected to lower compliance hurdles for platforms offering gold-backed tokens, making it easier for both retail and institutional investors in the UK to gain exposure to precious metals via blockchain technology.
This move comes as London seeks to modernize its role as a global hub for precious metals. Currently, vast quantities of gold sit dormant in London’s subterranean vaults. By encouraging tokenization, the FCA hopes to increase the velocity of these assets, allowing physical gold to be subdivided and traded digitally with greater efficiency. The Financial Times reported that the FCA will set out these ideas formally on Monday, signaling a proactive approach to Real World Asset (RWA) tokenization within the British financial ecosystem.
From a regulatory perspective, removing tokenized gold from the fund rulebook addresses a long-standing friction point where digital representations of commodities were caught in legal frameworks designed for mutual funds. If the proposal is adopted, it could set a precedent for other tokenized commodities, such as silver or platinum. This would allow London-based fintechs and crypto exchanges to offer gold-backed products with less administrative overhead, potentially increasing the liquidity of RWA platforms operating in the UK.
Investors and market participants should closely monitor the FCA’s official consultation paper for specific details on custody and vaulting requirements. The outcome will likely influence how other global financial centers, including the US, approach the regulation of tokenized commodities. If the UK successfully streamlines this process, it could trigger a significant influx of capital into the RWA sector, as traditional investors seek the stability of gold combined with the 24/7 liquidity of blockchain markets.