UK FCA Seeks Input on Exempting Tokenized Gold from Fund Rules

The UK Financial Conduct Authority (FCA) has opened a consultation to gather industry feedback on the regulatory treatment of tokenized gold. The regulator is assessing whether such digital representations of physical gold should be exempt from existing fund rules that govern collective investment schemes (CIS) and alternative investment funds (AIF).

Purpose of the Review

The FCA aims to determine if tokenisation can improve the trading, transfer, pledging and custody of gold in UK markets, particularly as wholesale collateral. The focus is on tokens that provide transparent backing, clearly defined ownership rights and reliable redemption mechanisms.

Potential Impact of Classification

Uncertainty over whether tokenized gold falls within the CIS or AIF perimeter could affect investor willingness and eligibility. If a token is classified as a CIS/AIF, or if its status remains unclear, certain investors may be unable or reluctant to hold the token.

Regulatory Options Under Consideration

• Clarify existing fund rules as they apply to tokenized gold.
• Develop a recognised classification for tokenized gold for specific regulatory purposes.
• Introduce targeted rule or legislative changes.
• Consider a bespoke regulatory regime for tokenized commodities.

Broader Wholesale Tokenisation Context

The FCA’s call for input runs alongside a joint statement from the FCA and the Bank of England on tokenisation in wholesale financial markets. The regulators reported 123 responses to a May‑round consultation, with collateral use cases—especially tokenised gold, money‑market funds and stablecoins—highlighted as a priority. A tokenisation roadmap is slated for release later this year.

London’s Role in Gold Trading

London accounts for roughly 70% of global over‑the‑counter gold trading volume, underscoring the significance of any regulatory changes affecting tokenised gold in the UK.