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UK regulator drafts rules for tokenized gold
The FCA is consulting banks on how tokenized gold could be used as collateral in wholesale markets, as London faces competition in gold trading from China.
The UK Financial Conduct Authority is preparing new rules for tokenized gold as part of a broader digital assets strategy, aiming to keep London at the center of global gold trading, according to CoinDesk. The FCA is consulting financial institutions on how tokenized gold, which represents ownership rights in physical bullion with the token issuer holding the backing gold, could fit into existing market practices.
The effort includes exploring tokenized gold as a form of collateral in wholesale markets, the report said. CoinDesk also noted that the FCA has been looking at how tokenization and digitization could change wholesale financial markets more broadly.
London’s OTC gold market has historically led global trading and accounts for 70% of the world’s notional gold trading volume, the story said, citing the World Gold Council. However, it added that China is increasingly challenging London’s dominance.
CoinDesk reported that the FCA expects to announce progress on drafting the rules for tokenized digital assets within the next few months. The article also referenced a UK Treasury plan for financial digitization projected to add 33 billion pounds to annual economic output, and earlier plans from the FCA and the Bank of England to pursue tokenization and modernization.
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