UK Opens Path for Tokenized Gold, Considers Stablecoins

UK regulators weigh changes to enable tokenized gold markets

The UK financial regulator is exploring rule changes to support tokenized gold products and the blockchain infrastructure that underpins them. The Financial Conduct Authority (FCA) is considering targeted exemptions that could make certain tokenized bullion funds and linked services easier to operate, potentially expanding the use of physical gold in digital markets and as financial collateral.

FCA targets selective exemptions to spur innovation

Under proposals under review, the FCA may grant specified regulatory reliefs for some tokenized gold products so they are not unduly constrained by existing investment fund rules. The objective is to encourage innovation across the bullion market while reinforcing London’s role as a global trading hub—particularly relevant as other jurisdictions, including China, seek larger shares of the international gold market.

Physical bullion meets blockchain

Tokenization converts ownership rights or claims on physical gold into transferable digital tokens on a blockchain. This can speed up settlement, improve market access, and allow a greater portion of existing bullion to be used as on-chain collateral. Faster transfers and programmable settlement are among the benefits proponents cite for tokenized gold and other digital assets.

Bank of England and Treasury join talks on collateral policies

The FCA has stressed that no final policy decision has been made. Officials from the Treasury and the Bank of England are engaged in parallel discussions, assessing how tokenized assets should fit within the wider financial system.

Stablecoins could be evaluated as collateral

The Bank of England is separately examining whether tokenized assets, including stablecoins, might qualify as eligible collateral under the Sterling Monetary Framework. If accepted, stablecoins and other digital assets could be used in central bank operations or liquidity arrangements—subject to strict standards for custody, liquidity, and regulatory oversight.

Next steps and regulatory challenges

Adoption hinges on defining robust custody standards, liquidity requirements, auditability, and supervisory arrangements. Should the UK implement these reforms, it would take a meaningful step toward integrating tokenized real-world assets with traditional financial infrastructure—balancing innovation with market integrity and investor protection.