The IRSG has set out its recommendations for the development of a regulatory framework for tokenised gold in UK wholesale markets. It supports a technology-neutral approach, whereby regulatory treatment is determined by the underlying economic substance, ownership rights and risks of gold, rather than the technology used to represent it. In particular, tokens representing direct ownership of gold should not automatically fall within the cryptoasset regime where tokenisation does not alter the nature of the ownership interest.
The IRSG highlights the need for greater legal certainty around fractional and co-owned tokens representing interests in specifically identified, allocated gold bars, while avoiding unintended consequences under existing fund regulation. It also considers tokenised gold an opportunity to establish a scalable framework that could extend to other precious metals and real-world assets, building on London's existing market infrastructure.
The response identifies significant opportunities to improve the efficiency of wholesale markets, particularly through faster settlement, delivery-versus-payment and the use of tokenised gold as collateral. However, realising these benefits will depend on interoperability with existing market infrastructure, industry-led standards and appropriate legal and prudential safeguards. Risks relating to custody, reconciliation, cyber security and financial crime should be addressed through proportionate measures that build on existing regulatory frameworks.
The IRSG therefore calls for a clear, proportionate and internationally aligned regulatory approach that supports innovation, provides legal certainty and enables the development of tokenised gold markets. Greater coordination between regulators and industry will be essential to establishing a framework that supports institutional adoption, strengthens London's position as a global wholesale markets centre and provides a foundation for the wider tokenisation of real-world assets.
