The UK Financial Conduct Authority (FCA) has opened a Call for Input asking whether certain tokenized gold products should sit outside the collective investment scheme (CIS) and alternative investment fund (AIF) regimes, a step that could reshape how digital claims on physical bullion are structured and sold in Britain.
Running through 23 October 2026, the consultation seeks evidence on whether tokenization could improve how gold is traded, transferred, pledged and held while maintaining high standards of market integrity and consumer protection. It follows a broader paper the FCA published in May with the Bank of England (BoE), whose responses raised gold given the international strength of London’s spot trading market.
Where The Perimeter Bites
Feedback from industry warned the FCA that uncertainty around the CIS and AIF perimeter may be holding back certain use cases. Because the CIS definition is broad and can capture property of any description, a gold token qualifies as a CIS if it meets the three statutory limbs, and the regulator concedes the analysis is not always conclusive.
“We have heard feedback from industry that uncertainty around the collective investment scheme (CIS) and alternative investment fund (AIF) regulatory perimeter may affect the development of certain use cases for tokenised gold.”
Consequences flow from that classification, since an Undertakings for Collective Investment in Transferable Securities (UCITS) scheme cannot be dedicated to gold and a fund dedicated to it may count as an unregulated CIS, limiting how firms market the product to consumers. Structure ultimately determines the outcome, since products representing direct ownership of an allocated bar that can be commercially traded are more likely to fall outside the definitions, while fractional interests in a bar managed collectively point to the pooling the rules envisage.
Gold dominates the market driving this interest, since of roughly 130 tokenized commodities tracked by RWA.xyz, 12 are gold products that account for more than 98% of the segment’s value, giving tokenized gold a market capitalization near $4.8 billion. Tether Gold leads at $2.67 billion and Paxos Gold follows at $1.86 billion, keeping both issuers at the top of activity as gold continues to serve as the reserve commodity backing on-chain assets.
Source: RWA.xyzInvestor Takeaway
The FCA is examining whether uncertainty over CIS and AIF rules is restricting tokenized gold structures, particularly where ownership, pooling and trading arrangements blur the regulatory perimeter.
What The Regulator Might Do
Options set out in the paper range from guidance clarifying the existing perimeter to working with the Treasury on a targeted exemption from the CIS and AIF regimes for certain products or gold market infrastructure. Any wider carve-out would apply only to products better regulated under another protective regime, the FCA said, to prevent regulatory arbitrage.
Any alternative regime would need to address twelve areas, beginning with the “legal nature of the holders’ interests and ownership rights” and running through custody, redemption, independent audit, valuation, disclosure and orderly wind-down on insolvency. The paper poses five questions, including whether a defined set of gold token arrangements should be regulated outside the CIS or AIF regime.
The consultation caps a run of UK activity, with FinanceFeeds reporting in August that the FCA was developing a framework through discussions with major banks on how tokenized gold could operate within the regulatory system. The outlet documented the backdrop, reporting that tokenized gold’s Q1 spot volume topped the entire 2025 total, and in October 2024 chronicled Digital Asset’s pilot that used gold, gilts and eurobonds as collateral in atomic, real-time transactions with Euroclear.
Investor Takeaway
The FCA is weighing clearer guidance or a targeted exemption for certain tokenized gold products, subject to safeguards covering ownership, custody, redemption, valuation, disclosure and insolvency.