Britain’s financial watchdog is weighing whether to lift tokenized gold out of the fund rulebook entirely, a move that could change how London’s bullion vaults are used.
The Financial Conduct Authority (FCA) will set out the idea on Monday, the Financial Times reported.
The FCA Wants London’s Gold to Stop Sitting Still
Tokenized gold gives a holder a blockchain claim on physical bars that an issuer stores in a vault.
Industry participants have told the FCA that uncertainty over whether tokenized gold would fall within the UK’s collective investment scheme (CIS) or alternative investment fund (AIF) rules could hinder its development. Both regimes restrict who can buy them.
Therefore, the regulator says it could work with the Treasury on a targeted exemption from that perimeter. Any carve-out would cover certain gold tokens or gold market infrastructure.
“Unlike shares or debt securities, which are already issued, traded and settled through mature electronic market infrastructures, tokenisation could make a traditionally physical and operationally complex asset easier to divide and transfer across digital markets,” it will say on Monday, according to the FT.
The stakes are national. The World Gold Council puts London’s share of global gold trading volumes near 70%. Meanwhile, China is building a rival bullion hub and chasing the same flows.
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Offshore Issuers Run the Market London Wants
Both leading gold tokens are issued outside the UK perimeter. Tether Gold (XAUT) backs $2.63 billion in distributed asset value, while Pax Gold (PAXG) backs $1.87 billion, according to RWA.xyz.
Activity is climbing on both. Monthly transfer volume reached $3.70 billion for XAUT and $1.61 billion for PAXG, up 10.91% and 14.10% over 30 days.
The FCA believes the move could unlock more of London’s bullion reserves for use as collateral. Meanwhile, the Bank will also consult later this year on whether to allow clearing houses to accept tokenized collateral.
It is also considering adding tokenised assets, including stablecoins, to its Sterling Monetary Framework, which provides funding to financial institutions.
FCA officials say no decisions have been made. Whether an exemption reaches retail buyers or stops at the wholesale desks that pledge collateral remains to be seen.
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Source: BeInCrypto
