For India's $100 bn Gold Market, a Tokenisation Lesson From the UK

Britain is moving closer to creating a regulatory framework for tokenised gold, seeking to bring one of the world's oldest stores of wealth onto blockchain-based financial infrastructure while preserving London's role as a global bullion hub. This move holds out promise and structure for India's massive gold market, where the government, institutions and household use gold as a marker of wealth and collateral.

The Financial Conduct Authority and Bank of England say they were developing a framework to give financial firms greater certainty over the use of tokenisation in wholesale markets, including tokenised collateral and settlement instruments. The FCA has also been progressively bringing tokenised investment products within existing financial rules.

Tokenised gold typically represents a claim on physical bullion held in custody, allowing investors to buy, transfer or use fractions of gold digitally without moving the underlying metal. For institutional markets, the technology could potentially allow gold to be used as programmable collateral, with ownership and transactions recorded on distributed ledgers.

The move is particularly significant for Britain, where London remains one of the world's most important centres for bullion trading. The UK's broader push is to move tokenisation beyond experiments and into mainstream financial-market infrastructure. A government-backed Wholesale Digital Markets Champion published a roadmap in July aimed at accelerating the use of tokenisation across Britain's financial markets.

The developments could hold important lessons for India, one of the world's largest gold markets and a country where much of the metal is held outside the formal financial system.

Indian households are estimated to hold as much as 25,000 tonnes of gold, according to the World Gold Council, while the country's gold-loan industry alone has historically used about 2,950–3,350 tonnes as collateral.

India's appetite for digital gold is already growing. The value of digital-gold purchases through UPI nearly tripled during 2025, from about 8 billion rupees in January to 21 billion rupees in December, with an estimated 13.5 tonnes purchased during the year. The growth has also highlighted a regulatory gap: the Securities and Exchange Board of India has noted that digital-gold products are outside its existing regulatory framework.

India's total gold loan portfolio has surged to nearly ₹15.6 lakh crore to ₹18.6 lakh crore, making it one of the fastest-growing segments in retail credit. High gold market prices, quick digital processing, and a strong preference for secured borrowing drive this rapid expansion across banks and NBFCs.

That creates a potential opportunity for India to move from loosely regulated "digital gold" products toward a regulated, asset-backed tokenisation framework.

Such a system could require independent verification of bullion reserves, segregation of customer assets, regular audits, clear redemption rights and a legally enforceable link between each token and identified physical gold. Those safeguards could help turn India's vast privately held gold stock into a more transparent financial asset.

The potential economic prize is significant. India imported substantial quantities of gold to meet domestic demand even as investment shifted toward bars, coins and digital formats. In the first quarter of 2026 alone, Indian gold demand reached 151 tonnes, up 10% from a year earlier, while investment demand rose 54% to 82 tonnes.

For New Delhi, Britain's approach therefore offers a broader lesson. Tokenisation is not simply about putting gold on a blockchain, but about creating the legal, custodial and regulatory infrastructure that makes a digital claim on physical gold trustworthy.

If India can combine that infrastructure with its Unified Payments Interface and digital public infrastructure, tokenised gold could eventually become a bridge between the country's enormous household gold holdings and its formal financial system.