UK regulator weighs carve-out for tokenized gold funds
Regulation & Gov ·
The Financial Conduct Authority is examining whether tokenized gold should be exempted from existing fund rules as part of a push to make bullion reserves usable as collateral and reinforce London's standing in the global gold market.
The review, reported by the Financial Times, centers on whether digital representations of physical gold holdings could sidestep fund regulations that currently constrain how such assets are structured and deployed. A second line of the same effort, described separately, has UK regulators exploring whether tokenized assets more broadly could be recognized as eligible collateral within the sterling monetary framework, according to wublockchain.xyz. Together the two threads point to a coordinated attempt to let vaulted gold do more financial work without leaving the vault.
The mechanics matter because gold reserves held for safekeeping in London are otherwise largely inert from a collateral standpoint — locked into fund structures that were not built with on-chain settlement in mind. An exemption would let tokenized claims on that bullion move and settle the way other eligible collateral does, potentially widening the pool of assets institutions can pledge without physically transferring metal.
The review lands amid a broader build-out of tokenized-gold infrastructure elsewhere: ITCEN Global-backed KorDA has launched a tokenized gold asset called $KGLD on LayerZero, positioned as one of the first of its kind in Asia, and Tezos has backed a platform bringing gold and other metals on-chain for investors. Trading venues have moved in parallel — GMX now offers gold and silver perpetuals with up to 100x leverage using Chainlink price feeds, and Binance has launched USDT-settled gold and silver options after metals perpetuals on the exchange each topped $7 billion in peak daily volume. None of these platforms are named in the FCA's review, but they illustrate the demand backdrop regulators are responding to.
What remains unresolved is whether the FCA will actually grant the exemption, on what timeline, and how tokenized gold would be defined and custodied for regulatory purposes. It is also unclear whether the sterling collateral framework changes and the fund-rule exemption would be implemented together or on separate tracks, and how UK rulemaking would interact with tokenized-gold products already trading in other jurisdictions. Coverage so far draws on two distinct sources, leaving the underlying consultation details and any formal FCA statement still to be published.