Buying Tokenized Gold in the UK Might Get Easier. Here's What the FCA Is Weighing

The UK Financial Conduct Authority (FCA) is set to publish a proposal on Monday that could remove tokenised gold from the collective investment scheme (CIS) and alternative investment fund (AIF) regulatory perimeter. The change aims to clarify the status of digital gold tokens and potentially broaden their use in London’s bullion market.

Current regulatory uncertainty

Industry participants have highlighted that it is unclear whether tokenised gold falls under CIS or AIF rules, both of which limit who can purchase such assets. This uncertainty is seen as a barrier to the development of tokenised gold products in the UK.

Proposed targeted exemption

The FCA is considering a targeted exemption that would apply to specific gold tokens or related market infrastructure. Such a carve‑out could allow these tokens to operate outside the existing fund rules while still ensuring appropriate oversight.

Potential benefits

According to the FCA, tokenisation could make a traditionally physical and operationally complex asset easier to divide and transfer across digital markets, similar to how shares and debt securities are handled through mature electronic infrastructures.

London’s position in global gold trading

The World Gold Council estimates that London accounts for roughly 70% of global gold trading volumes, underscoring the strategic importance of any regulatory shift.

Key tokenised gold products

Two leading gold tokens are issued outside the UK regulatory perimeter:

• Tether Gold (XAUT) – backs $2.63 billion in distributed asset value with a monthly transfer volume of $3.70 billion.
• Pax Gold (PAXG) – backs $1.87 billion in distributed asset value with a monthly transfer volume of $1.61 billion.

Broader implications

The FCA believes that easing restrictions could unlock more of London’s bullion reserves for use as collateral. The Bank of England is also expected to consult later in the year on allowing clearing houses to accept tokenised collateral and on incorporating tokenised assets, including stablecoins, into its Sterling Monetary Framework.

Next steps

The FCA has stated that no final decisions have been made. It remains to be seen whether any exemption will extend to retail investors or remain limited to wholesale participants using tokenised gold as collateral.