The UK Financial Conduct Authority (FCA) has launched a call for input to evaluate whether certain tokenized gold products should be granted exemptions from existing fund regulations.
The regulator is assessing whether legal uncertainty regarding whether physical gold-backed tokens fall under the perimeter of Collective Investment Schemes (CIS) or Alternative Investment Funds (AIF) is hindering institutional adoption and investor access. The consultation period runs through October 23, 2026, offering market participants an opportunity to inform potential regulatory modifications or the creation of a bespoke regime for tokenized commodities.
Classification under CIS or AIF frameworks often imposes restrictive distribution rules and operational requirements that can limit investor participation and reduce token portability. The FCA’s inquiry focuses specifically on products backed by physical gold with transparent allocation, clear legal title, and reliable redemption mechanisms. Depending on industry input, potential regulatory outcomes include updating official guidance, introducing tailored exemptions, or constructing a standalone framework for tokenized real-world assets.
Advancing Wholesale Tokenization Across Financial Markets
The consultation coincides with a joint statement from the FCA and the Bank of England reviewing feedback on wholesale market tokenization, where respondents identified collateral usage as a primary application. Regulators noted that market participants requested explicit clarity regarding the eligibility of tokenized assets, such as money market funds, gold, and stablecoins, for use as wholesale financial collateral. The joint authorities plan to publish a dedicated wholesale tokenization roadmap with specific implementation timelines later this year.
Streamlining the regulatory treatment of tokenized gold holds particular strategic significance for London, which handles approximately 70% of global over-the-counter gold trading volume according to the World Gold Council. Modernizing regulatory perimeters aims to make vaulted bullion holdings more accessible for dynamic, cross-border digital settlement and financial collateral applications without compromising underlying market integrity standards.
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