UK Regulator Approves New Tokenized Fund Rules, Streamlining Blockchain Adoption

Tokenized gold uses distributed-ledger technology to represent rights to physical bullion, potentially making ownership transfers and collateral management faster and more efficient. Clear standards are needed for custody, redemption, legal ownership and verification of reserves. The initiative carries particular weight for Britain because London handles roughly 70% of global gold trading, while regulators are seeking to preserve the city’s role as financial markets adopt tokenized assets.

The Financial Conduct Authority has held discussions with banks and other industry participants about rules for tokenized gold and its potential use as collateral in wholesale markets, according to reports on Aug. 10, 2026. The FCA and Bank of England launched a broader tokenization consultation on May 18, with submissions closing July 3. Separately, HM Treasury said on July 16 that its short-dated Digital Gilt Instrument, or DIGIT, would be issued on HSBC Orion by the first quarter of 2027. The transaction’s size has not been disclosed, while HSBC and London Stock Exchange Group are developing a link to widen investor access.

Tokenized gold uses distributed-ledger technology to represent ownership of physical bullion, potentially making a traditionally cumbersome asset easier to divide, transfer and mobilize as collateral in repurchase agreements, securities lending and derivatives. The issue matters especially in London, the world’s largest over-the-counter spot-gold hub, which accounts for about 70% of global notional gold trading volume. A government-backed industry task force estimated in July that tokenization could add as much as £33 billion ($44 billion) to annual UK output by 2035.

On Sept. 14, 2026, the Financial Conduct Authority opened a call for input covering tokens backed transparently by physical gold, with clear ownership rights and reliable redemption arrangements; comments are due Oct. 23. The watchdog is considering clearer guidance, an “eligible gold token” classification, targeted rule or legislative changes, and potentially a bespoke regime. It may also work with HM Treasury to exempt certain products or market infrastructure from the collective investment scheme and alternative investment fund perimeters. No final policy has been adopted.