London’s 70% Gold Trading Dominance at Stake as FCA Pushes Blockchain Framework

The UK’s tokenized gold market may be entering a new regulatory chapter.

According to a Financial Times exclusive report, the Financial Conduct Authority (FCA) is in active discussions with major banks and industry players on a dedicated framework for tokenized gold.

Tokenized Gold as Wholesale Collateral, What the FCA Is Planning

London handles around 70% of global gold trading. Regulators want to keep it that way.

Competition from Shanghai and Hong Kong is rising, and the FCA is not standing still.
The FCA wants tokenized gold to work as collateral in wholesale markets. These are digital tokens backed by physical gold held in custody.

The goal is to make them eligible alongside traditional collateral instruments. The target is uncleared OTC derivatives. In that market, collateral efficiency shapes how much capital institutions must tie up.

Getting this right has real balance-sheet consequences for major banks. The push builds on a May 18, 2026 joint paper. The FCA, Bank of England, and Prudential Regulation Authority (PRA) released it together.

That paper named tokenized gold as a collateral candidate under UK EMIR rules. Tokenized money-market funds were flagged alongside it. Both would receive the same prudential treatment as their traditional equivalents.

The paper stressed that tokenized traditional assets should receive equivalent prudential treatment to their non-tokenized counterparts.

Wells Fargo’s 24/7 tokenized deposits signal a broader Wall Street embrace of digital rails, and London’s gold push fits the same institutional logic.

Industry feedback on the May vision paper closed in early July 2026.

The FCA is expected to publish a feedback statement before the end of summer, with further collateral policy and a cross-authority tokenization roadmap due later in the year.

The regulator does not currently oversee physical gold trading, that market is unregulated in the UK, but it does supervise gold-related derivatives and listed gold-linked products.

London’s 70% Gold Share Under Pressure as Asia Challenges the City’s Bullion Crown

The strategic angle is hard to miss. London’s gold dominance rests on three pillars: deep liquidity, established vaulting infrastructure, and the LBMA benchmark. That foundation is strong. But it is not permanent.

Shanghai and Hong Kong are building capacity fast. The City cannot afford to let digital infrastructure lag behind. Falling behind on tokenization rails could cost London its edge.

Tokenized gold brings three efficiency gains for institutional players. First, near-instant 24/7 collateral mobilization. Second, automated margin call processing. Third, reduced settlement friction on OTC derivatives.

These features matter more as markets move toward programmable finance. Static collateral systems are becoming a liability.

Institutional players are already moving. Aviva Investors’ Tokenized USD Liquidity Fund on XRPL shows how RWA liquidity structures are taking shape. Gold could follow the same path once UK standards are clear.

Tokenization momentum is building globally. Tokenized Stocks Near the $2B mark and the UK’s Digital Securities Sandbox remain one of the most advanced regulatory testbeds in the world.

Clear tokenized gold standards could pull institutional issuance, custody mandates, and DeFi-TradFi integration toward London. That is a meaningful moat. And right now, it is still London’s to build.

Risks remain. Custody and audit standards for tokenized gold require careful design, particularly around legal title, proof-of-reserve auditing, and smart contract security.

Gold price volatility also adds complexity to collateral stress-testing.

The timeline points to formal consultation into 2027, with the broader UK tokenization roadmap expected to crystallize by the end of 2026.

BNY’s 24/7 Tokenized US Treasuries Settlement shows that the infrastructure for always-on digital settlement already exists, the question for gold is whether the regulatory wrapper arrives fast enough.

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