Background
This follows a broader Call for Input published in May with the Bank of England (BoE) on the future of tokenisation: a joint vision from the authorities for UK wholesale financial markets, on which feedback has also been provided by the FCA and BoE.
Summary
The FCA suggests that appropriately designed tokenised gold can combine the credibility of physical bullion held under strong custody arrangements with the efficiency of digital transfer, programmable controls and clearer ownership records. In particular, the FCA are seeking input in relation to:
- Wholesale collateral and settlement: The FCA highlights tokenised gold’s potential as wholesale collateral in securities lending, repo and derivatives markets, offering benefits such as greater collateral mobility, faster settlement, improved capital efficiency and reduced reconciliation risks. Tokenisation could also enable delivery-versus-payment transactions, such as exchanging gold tokens for tokenised cash. However, significant legal and regulatory questions remain, including ownership rights, insolvency treatment, collateral enforcement, settlement finality and reconciliation with custody records. Prudential treatment may also require clarification. To support scale, interoperability between traditional and DLT-based systems is essential. The FCA seeks industry input on standards for ownership records, issuance, safeguarding, auditing, cybersecurity and governance.
- Tokenisation and consumer-facing innovation: The FCA sees tokenisation as a way to expand retail access to gold through fractional ownership, faster transfers, lower-cost investment and innovative product designs. Tokenised gold products could allow consumers to trade more conveniently, including outside traditional market hours, while supporting greater product diversity. However, regulatory protections vary considerably across tokenised products and distribution channels. Unlike gold exchange traded funds (ETFs), where disclosure standards are well established, practices in tokenised gold markets remain inconsistent. The FCA therefore expects minimum disclosure standards so that investors can understand custody arrangements, redemption rights, regulatory status, fees, investment thresholds and the potential consequences if issuers, custodians, vault operators or technology providers fail.
- FCA role and possible policy responses: The FCA sets out that it, HM Treasury and the BoE recognise that tokenised gold could engage multiple regulatory regimes, including prudential requirements, collateral eligibility rules and the UK cryptoasset framework. They are seeking evidence on how these regimes interact and where regulatory barriers may arise. The authorities see their role as providing clarity, coordinating policy and supporting safe innovation while leaving market development largely to industry. Potential responses range from publishing guidance and clarifying existing rules to creating an “eligible gold token” classification, making targeted legislative changes, or introducing a bespoke regime for tokenised gold or commodities. Any approach would remain flexible, proportionate and supportive of competition and innovation.
- Collective Investment Scheme (CIS) and Alternative Investment Fund (AIF) perimeter: The FCA explains that industry feedback suggests that uncertainty over whether tokenised gold constitutes a CIS or AIF may hinder adoption, as a CIS or AIF classification can trigger additional authorisation, disclosure, distribution and supervisory requirements, potentially restricting access for certain investors. The FCA recognises that regulatory clarity is critical, particularly for market infrastructure use cases. Potential responses include guidance, perimeter clarification, or targeted exemptions, provided alternative frameworks maintain robust protections for investors, market integrity and operational resilience.
Next steps
The FCA sets out that the deadline for input is 23 October 2026.