EL7.AI
CommoditiesMediumUpdated•Originally published 14 September 2026•Updated 14 September 2026•
2 min read

FCA and PRA Review Tokenized Gold as Collateral for OTC Derivatives

Key Facts

1The FCA and PRA are reviewing tokenized gold as collateral for uncleared OTC derivatives; they have not announced an exemption from fund rules.
2Current rules recognize allocated pure gold bullion of accepted good-delivery quality as eligible collateral.
3The call for input closed on July 3, 2026; authorities targeted a roadmap later in 2026 and consultations on most rule changes in 2027.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are reviewing whether tokenized gold should be eligible as collateral for uncleared over-the-counter (OTC) derivatives, according to a joint paper from the FCA and Bank of England. Any eligibility would remain subject to standards developed with the industry.

The official documents do not describe this work as a proposal to exempt tokenized gold from traditional fund rules. The review concerns the treatment of tokenized collateral in wholesale markets under the existing regulatory framework, while fund-tokenization policy remains within the authorized-funds framework.

Existing rules already permit physical gold as collateral for some uncleared OTC derivatives when it consists of allocated pure bullion of recognized good-delivery quality. The policy question is therefore how to treat a digital representation of an eligible asset, not whether gold can become collateral for the first time.

The authorities prefer to let tokenized versions of assets already accepted as regulatory collateral qualify when risks arising from the tokenization arrangement are mitigated. Legal rights, enforceability of the collateral agreement, custody, valuation and settlement therefore remain central; a link to eligible bullion does not automatically qualify a digital token.

Tokenization records a representation of an asset or its ownership using distributed-ledger technology. The authorities say it could improve the efficiency of issuance, trading, settlement and collateral management while reducing operational friction, but they present better liquidity as a potential benefit and provide no evidence that bullion-market liquidity has already increased.

The call for input closed on July 3, 2026. The authorities targeted a full roadmap later in 2026 with timelines for specific rule changes, most of which they expected to consult on in 2027; they also said further policy on how tokenized collateral could operate under the existing framework would follow later in 2026.