UK FCA seeks views on fund rule exemptions for tokenized gold

The Financial Conduct Authority has opened a call for input to assess whether some tokenized gold offerings should be treated outside existing UK fund rules. The FCA’s review is concentrated on token products that represent physical gold and where backing, ownership rights and redemption arrangements are transparent and robust. The regulator said uncertainty over fund classification could be constraining certain use cases, particularly in wholesale markets. A key question for the FCA is whether some tokenized gold should sit within the collective investment scheme (CIS) or alternative investment fund (AIF) perimeters, or be treated differently for specific regulatory purposes. The agency warned that if classification is unclear or a product is treated as a CIS/AIF, that could affect which investors can hold the token and whether market participants will use it as intended. Depending on industry feedback, the FCA said it may clarify existing rules, establish recognized classifications for regulatory purposes, pursue targeted rule or legislative changes, or consider a bespoke regime for tokenized gold or other tokenized commodities. The consultation accompanies a joint feedback statement from the FCA and the Bank of England on wholesale tokenization workstreams. That statement said firms responded favorably to the UK’s tokenization efforts and that 123 responses were received to a May call for input, with collateral cited as the most frequent use case. Respondents sought clearer guidance on what can serve as eligible tokenized collateral, including tokenized money market funds, gold and stablecoins. The regulators plan to publish a tokenization roadmap later this year setting out workstream details and target dates. Market context underscores the potential scale: the World Gold Council estimates London handles about 70% of global notional over-the-counter gold trading volume. The FCA has already held discussions with banks and market participants about a possible tokenized gold framework, and the UK is simultaneously progressing stablecoin rules and testing cross-border digital pound interoperability. The consultation runs until Oct. 23 and will inform whether clearer guidance, targeted exemptions or a bespoke regulatory approach is needed for tokenized gold.