Britain's financial regulator is preparing a framework for tokenized gold that aims to reinforce London's role as the global trading center and promote the digitization of the financial market, against the intensified competition from Hong Kong and Shanghai in gold trading, the Financial Times reported on Monday.
Tokenised gold is a kind of digital tokens that represent ownership rights in physical gold, and its issuers will hold bullion to back those tokens.
Financial Conduct Authority in the UK has discussed the regulatory approaches of tokenzied gold with industry bodies, including several large banks, the report said.
The authority has also long been seeking feedback on how to use tokenized gold as collateral in the wholesale market, with the related plans on drafting this regulatory standard to be announced several months later.
London accounts for about 70 percent of global gold trading volumes, according to the World Gold Council, while rising competitiveness from China is pressuring the country.
Hong Kong earlier launched the central clearing system for gold and a new gold price ticker to facilitate and attract more investors to trade gold in the city, while Shanghai is taking efforts to become a global wholesale hub of gold trading.
One person familiar with the matter warned in the report that if London does not modernize its market through measures including tokenization, other exchanges may replace its central position in the future.
