The UK’s push to regulate tokenised gold is really about one question: who will control the financial infrastructure of the gold market when trading becomes increasingly digital?
That is a more important question than whether gold should exist on a blockchain.
Gold already has a market. It has buyers, sellers, banks, vaults, clearing systems, benchmarks and decades of institutional trust. London sits at the centre of that system. The World Gold Council estimates that London’s over-the-counter market accounts for about 70% of global notional gold trading volume. London also provides the LBMA Gold Price benchmark and a major network of vaults and clearing infrastructure.
So why would London need tokenised gold?
Because having the biggest market today does not guarantee having the most important market tomorrow.
London’s Gold Advantage Has a Digital Weakness
London’s strength comes from infrastructure built over many years. The market knows where gold sits, who holds it, how participants settle transactions and how prices get established.
But much of this infrastructure belongs to the physical world.
Gold bars sit in vaults. Ownership moves through financial institutions. Settlement depends on established processes. Different parts of the transaction can sit in different systems.
Blockchain offers a different model. It can put the record of ownership and the transfer of that ownership onto a shared digital ledger.
That does not make the gold itself digital.
It makes the market around the gold more digital.
This distinction explains why the UK’s current approach matters. The FCA and Bank of England have already identified tokenised collateral and settlement as important areas in their wider programme for modernising wholesale financial markets.
Their May 2026 joint vision explicitly says that firms need greater regulatory clarity if tokenisation is to move from experimentation toward scale.
Gold has now entered that conversation.
And there is a reason.
The Real Opportunity Is Not Fractional Gold
Much of the public discussion around tokenised gold focuses on fractional ownership.
That is easy to understand. A physical gold bar has a fixed size, while a digital token can represent a much smaller interest.
But fractional ownership is not the most interesting part of this development.
The bigger opportunity is financial mobility.
A tokenised gold asset could move through digital financial infrastructure without requiring the underlying bullion to move physically. If regulators recognise the token, institutions could potentially use it in collateral arrangements, settlement systems and other wholesale transactions.
That changes the role of gold.
Instead of treating gold as something that sits in a vault and changes hands through traditional financial records, institutions could treat a verified digital claim on gold as an asset that works inside a broader digital financial system.
That is a much bigger proposition.
The FCA’s reported discussions about whether tokenised gold could serve as collateral are therefore particularly significant.
Collateral is where tokenisation starts to become financially serious.
If a bank can trust the legal ownership, valuation, custody and redemption arrangements behind a tokenised asset, that asset can potentially become part of institutional finance.
The technology then becomes infrastructure rather than a novelty.
China Creates the Urgency
London’s interest also makes more sense when viewed against competition from Asia.
The World Gold Council says London remains the historic centre of global gold trading, but it also notes that London has been losing relative share of global trading volumes.
China has clear ambitions in this market. Shanghai already has a major role in gold trading, while Hong Kong provides another important financial gateway.
This creates an unusual competitive situation.
London does not need to discover gold trading. It already dominates it.
What it needs to do is make sure the next version of gold trading still happens in London.
That is why tokenisation should be viewed as a competitive issue rather than simply a technology issue.
If Shanghai or Hong Kong develops an efficient regulatory and technological environment for digital gold before London does, new trading activity could develop there. The physical gold could remain globally connected, but the financial activity around it could gradually move.
That is the risk London is trying to avoid.
The Blockchain Does Not Solve the Hardest Problem
There is also a weakness in the tokenisation story that deserves more attention.
A blockchain can tell us who owns a token.
It cannot, by itself, tell us whether the gold behind that token actually exists.
Imagine that an issuer creates 10 million tokens representing 10 million grams of gold. The blockchain can record all 10 million tokens.
But who checks the vault?
Who verifies the bars?
Who reconciles the physical inventory with the number of tokens in circulation?
And who confirms that the same gold has not been pledged somewhere else?
These questions bring the discussion straight back to traditional finance.
Tokenised gold therefore does not remove the need for custody, audit, reconciliation and financial controls. In some ways, it makes them more important.
The World Gold Council’s own 2026 digital gold initiative points in this direction. It is working on shared infrastructure for digital gold that includes custody coordination, reconciliation, compliance and redemption.
That is revealing.
The future of digital gold will not depend only on better blockchain technology. It will depend on connecting the blockchain to reliable systems that verify what sits behind it.
Accounting Becomes Part of the Infrastructure
Suppose a business buys tokenised gold. It later transfers part of its holdings to another entity. It uses another portion as collateral and sells the rest. The blockchain can provide a transaction history. But the business still needs to answer accounting questions.
What exactly does it own? How should it classify the token? What value should it report? When should it recognise a gain or loss? What happens when it uses the token as collateral? What records prove the transaction? And what tax consequences follow from each event?
These questions become more difficult when the business operates across jurisdictions or uses several wallets and custodians.
This is where Crypto Accountants can become important.
Our role is not simply to calculate cryptocurrency tax. A specialist accounting firm can help businesses reconcile blockchain transactions, connect wallet data with financial records, establish appropriate accounting treatment and prepare evidence for tax and audit purposes.
A Crypto Tax Accountant can then examine the tax consequences of transactions involving tokenised assets, including disposals, transfers and other taxable events where applicable.
Malik Ali, FCCA, Managing Partner at Crypto Accountants, argues that tokenisation should not be viewed simply as a blockchain innovation. In his view, the real challenge is integrating tokenised assets into existing financial infrastructure.
Blockchain can provide a transparent transaction layer. But institutional confidence depends on whether ownership, custody, valuation, accounting, tax, regulation and reporting can all work together.
For tokenised gold, therefore, the value is not just in creating a digital token backed by gold, but in building the financial, legal and compliance framework that makes that token reliable and usable within the wider financial system.
The UK Is Really Trying to Tokenise Trust
This may be the most important point in the entire discussion.
London’s gold market became important because participants trusted its infrastructure.
Tokenisation does not remove that requirement.
It changes the infrastructure through which trust operates.
The FCA’s broader tokenisation programme shows that UK regulators understand this. In April 2026, the FCA issued a framework for progressing fund tokenisation. In May, the FCA and Bank of England called for industry input on how tokenised markets should develop, including areas such as collateral and settlement.
The message is not “put everything on a blockchain.”
It is closer to: build digital markets that institutions can trust.
That distinction could determine whether London gains from tokenisation or loses ground to competing financial centres.
Tokenised Gold Could Be London’s Test Case
Gold is unusually suitable for this experiment.
It has a clearly identifiable physical asset and deep liquidity. It has established custody arrangements. Plus, it has institutional demand and recognised pricing.
The World Gold Council reported record global gold market liquidity in the first half of 2026, averaging $488 billion per day. London OTC activity averaged $249 billion per day during the same period.
So this is not an attempt to digitise an obscure market.
It is an attempt to modernise one of the world’s largest financial markets, even though it is already highly active.
If the UK can create a trusted framework for tokenised gold, the lessons could extend far beyond bullion.
The same infrastructure could eventually support tokenised bonds, funds, property and other real-world assets.
That makes gold a test case.
The real prize is much larger.
How Crypto Accountants Can Help
For businesses entering tokenised assets, the accounting work should start before transactions become difficult to explain.
Crypto Accountants can help businesses build systems for blockchain transaction records, wallet reconciliation, digital asset accounting, tax reporting and audit preparation.
For tokenised gold businesses, that work can become particularly important because the accounting record may need to connect three things: the blockchain transaction, the contractual rights attached to the token and the physical asset supporting those rights.
That connection needs clear documentation.
It also needs a process that can withstand scrutiny from auditors, tax authorities, regulators, and financial counterparties.
As tokenised real-world assets grow, that supporting financial infrastructure may become just as important as the blockchain itself.
Speak With Crypto Accountants
As tokenised assets move closer to mainstream financial markets, businesses need more than blockchain knowledge. They need accurate accounting, reliable records and clear tax treatment.
Crypto Accountants works with businesses and digital asset projects on crypto accounting, tax, blockchain reporting and financial compliance.
Speak with a Crypto Accountant today; call us on 0208 638 5800.
