The UK Financial Conduct Authority (FCA) is considering removing tokenized gold from existing fund regulations. The regulator plans to discuss a potential exemption from the collective investment scheme and alternative investment fund rules, which currently restrict access to these assets.
Industry participants noted that regulatory uncertainty regarding these classifications hinders market development. The FCA suggests that a targeted exemption could cover specific gold tokens or market infrastructure, making physical gold easier to divide and transfer via digital markets.
The initiative aims to utilize London's bullion reserves, which account for nearly 70% of global gold trading volumes, as collateral. Currently, leading tokens like Tether Gold (XAUT) and Pax Gold (PAXG) operate outside the UK, with distributed asset values of $2.63 billion and $1.87 billion respectively.
Monthly transfer volumes for these tokens have grown, reaching $3.70 billion for XAUT and $1.61 billion for PAXG, marking increases of 10.91% and 14.10% over 30 days. The Bank of England is also consulting on accepting tokenized collateral in clearing houses and its Sterling Monetary Framework.
