Authored by Zoltan Vardai via CoinTelegraph.com,

The UK’s Financial Conduct Authority (FCA) has reportedly held talks with banks and other industry participants over potential rules for tokenized gold.

The FCA has also sought feedback on the use of tokenized gold as collateral in wholesale markets, people familiar with the matter told the Financial Times.

The regulator is reportedly preparing to outline plans for new regulatory standards for tokenized gold.

Cointelegraph has approached the FCA for comment on the matter.

London is the world’s largest over-the-counter gold trading hub, accounting for about 70% of global notional gold trading volume, according to the World Gold Council.

“There’s huge competitive pressure from Shanghai and Hong Kong... Shanghai wants to become the wholesale hub for the gold market,” one of the people said, adding that if London does not modernize its gold market through measures including tokenization, other venues may take the lead.

The talks come amid a broader UK push to expand tokenized financial markets.

A government-backed industry task force said in July that tokenization could add as much as 33 billion British pounds ($44 billion) to the UK’s annual economic output by 2035.

The roadmap also calls for the UK’s first tokenized government bond by early 2027 and seeks to make tokenized securities usable for trading, settlement and as collateral.

The World Gold Council said this year that digital gold would mean ownership “would no longer be constrained by bar sizes, vault locations or fragmented settlement mechanisms”.