FCA Weighs Exemption for Tokenized Gold in London
The regulator wants to bring more clarity around gold tokens like Tether Gold and Pax Gold in a market where London is still the biggest trading center.
Key Takeaways
- The UK FCA is considering putting tokenized gold outside the funds framework through a targeted exemption.
- That should remove uncertainty about whether gold tokens fall under UK rules for collective investment schemes or alternative investment funds.
- The move fits into a broader UK approach to give tokenized assets a clearer place in wholesale markets.
The UK regulator, the FCA, is considering putting tokenized gold outside the funds framework. That could change the way gold is traded and stored in London, while the discussion also fits into a broader UK push to give tokenized assets a clearer place in wholesale markets. It also lines up with the broader UK approach to tighter rules for tokenized assets and market infrastructure, as seen in the debate over the new FCA rules for crypto.
Exemption for Gold Tokens
Tokenized gold gives the holder a blockchain claim on physical gold bars that an issuer keeps in a vault. According to the Financial Times, the FCA plans to present an idea on Monday to work with the Treasury on a targeted exemption from the current rules. That should remove uncertainty about whether gold tokens fall under the UK rules for collective investment schemes or alternative investment funds.
Those rules limit who can buy such products. Market participants have told the regulator that this lack of clarity could slow the development of tokenized gold. If an exemption does happen, the FCA says it could apply to certain gold tokens or to the infrastructure around the gold market.
London Defends Its Role
The stakes are high for the UK market. According to the World Gold Council, about 70% of global gold trading runs through London. At the same time, China is building its own bullion hub and trying to attract the same flows.
The two biggest gold tokens now come from issuers outside the UK regulatory framework. According to RWA.xyz, Tether Gold has $2.63 billion (€2.3 billion) in distributed asset value backing, while Pax Gold covers $1.87 billion (€1.6 billion). Activity is also picking up: monthly transfer volumes came in at $3.70 billion (€3.2 billion) for XAUT and $1.61 billion (€1.4 billion) for PAXG, both higher than 30 days earlier.
Broader Policy on Tokenized Assets
The move fits into a broader line from the FCA and the Bank of England. The two institutions are already working together on a framework for tokenized assets in wholesale markets and published a joint call for input in May on tokenized securities such as bonds, stocks, and fund units. Later this year, the Bank also wants to look at whether clearing houses should be allowed to accept tokenized collateral.
For European crypto watchers, this matters because regulators are increasingly treating tokenization not as a separate experiment, but as part of existing market rules. The FCA did say no decision has been made yet. It is also still unclear whether any exemption would apply only to wholesale desks or end up being broader.
