The UK’s Financial Conduct Authority (FCA) has released a call to for input into whether tokenising gold could improve its efficiency and competitiveness following the results of its broader wholesale tokenisation request.

The regulator said Monday that it is hoping to understand industry appetite for the creation of digital tokens representing ownership of physical gold which can then be traded electronically. The call comes following specific interest in the commodity during its May consultation regarding the future of tokenisation in wholesale markets.

Currently, the FCA is particularly interested in use cases in wholesale markets, specific areas that may prove challenging and whether it would increase uncertainty the boundary between collective and alternative investment schemes.

The regulator believes that allowing gold to be tokenised could make it easier to transfer and use across digital markets, particularly as collateral for wholesale transactions. It added in the call that it may “also support new forms of retail investment and product innovation”.

The UK dominates the gold trading market. It is the largest hub of gold spot trading in the world and makes up around 70 per cent of total trading volumes globally, according to industry body the World Gold Council.

Separately, the FCA has published the results of its May consultation on wider wholesale tokenisation.

In the paper, it said that firms were generally “very supportive” of its proposed approach and recognised that industry and the authorities would need to work together to tokenise wholesale markets.

At the same time, firms wanted faster progress and assurances that the roadmap would come with clear timelines and implementation milestones, as well as clarity on a range of legal questions including eligibility of tokenised collateral, interoperability and legal status compared to non-tokenised assets.

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