The UK's Financial Conduct Authority (FCA) is reportedly considering exempting tokenized gold-based products from certain fund requirements as part of a broader initiative to expand tokenization in wholesale markets.
According to a report by the Financial Times, the FCA is expected to announce later on Monday that it is examining a special regime for tokenized gold or tokenized commodities together with the Bank of England and the UK Treasury.
The FCA is expected to state that tokenization could simplify the division and transfer of gold in digital markets, potentially allowing more of London's gold reserves to be used as collateral in financial transactions.
The FT reported that unnamed industry representatives warned the FCA that uncertainty over whether tokenized gold-based products fall under UK rules for collective investment schemes or alternative investment funds could slow development and limit access for some investors.
The FT reported that the FCA has not made a final decision.
These proposals come amid efforts by UK regulators to expand tokenization in wholesale markets. According to the FT, the Bank of England is also considering whether tokenized assets, including stablecoins, could become acceptable collateral under its Sterling Monetary Framework.
London remains the world's largest over-the-counter gold market, accounting for about 70% of the world's notional trading volume, according to the World Gold Council.
The UK is also developing regulations for stablecoins and testing the interoperability of a digital pound for cross-border payments.
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