Lead

The United Kingdom’s top financial regulators, the Financial Conduct Authority (FCA) and the Bank of England (BoE), have jointly launched a public consultation on the regulatory treatment of tokenised assets in wholesale markets. The call for input, which closes on 3 July 2026, seeks to clarify how tokenised exposures, collateral and settlement instruments should be governed within the existing legal and regulatory perimeter. The initiative comes as the UK’s Digital Securities Sandbox already hosts 16 firms issuing and settling tokenised securities, and as the BoE plans to extend its Real‑Time Gross Settlement (RTGS) and CHAPS payment systems to near‑24/7 availability.

Background

Tokenisation refers to the representation of traditional financial instruments on a distributed ledger technology (DLT) platform, creating digital tokens that can be transferred, traded and settled electronically. In the wholesale space, tokenised assets could change how collateral is posted, how settlement is executed and how legal ownership is recorded. The UK government has signalled interest in using DLT for sovereign debt issuance and in regulating stablecoins on a deposit‑bank basis, indicating a broader strategy to modernise financial infrastructure.

The Digital Securities Sandbox, launched by the FCA, is a regulatory sandbox that allows firms to test tokenised securities issuance and settlement in a live environment. It currently supports 16 firms, giving them early exposure to the operational and compliance challenges of DLT‑based securities.

What Happened

On 28 May 2024, the FCA and BoE issued a joint “Call for Input” on tokenisation in wholesale markets. The consultation focuses on three core areas:

  • How tokenised exposures should be treated within existing regulatory frameworks.
  • The role of tokenised assets as collateral in wholesale markets.
  • Settlement mechanisms for DLT‑native instruments.

Responses to the consultation are open until 3 July 2026, with a feedback statement expected in the summer of that year. The BoE also announced plans to extend RTGS and CHAPS operating hours to near‑24/7, a move that would reduce cross‑border payment delays caused by time‑zone mismatches.

Meanwhile, the UK government is exploring the possibility of issuing gilts on a DLT platform, which would allow sovereign debt to be issued, traded and settled on a distributed ledger. The government also intends to regulate systemic stablecoins within the banking regulatory framework, treating them similarly to traditional bank deposits.

Market & Industry Implications

The consultation signals a potential shift in how tokenised securities will be integrated into the UK’s wholesale financial system. If the regulators adopt a framework that recognises tokenised assets as equivalent to their traditional counterparts, firms could benefit from:

  • Reduced settlement times through DLT‑native settlement.
  • Lower collateral costs if tokenised assets are accepted as collateral under existing rules.
  • Greater operational efficiency from near‑24/7 RTGS and CHAPS availability.

The early engagement of 16 firms in the Digital Securities Sandbox suggests that the industry is already testing the waters, and their feedback will likely influence the final regulatory design. A clear regulatory framework could also attract further investment in tokenisation projects, as firms gain confidence in the legal and compliance environment.

What to Watch

  • Submission deadline: 3 July 2026 – the final date for stakeholders to provide input on the consultation.
  • BoE’s near‑24/7 RTGS and CHAPS rollout – the timeline for extending operating hours and its impact on cross‑border payments.
  • UK government policy on sovereign DLT debt issuance – any announcements on pilot programmes or regulatory approvals.
  • Regulatory guidance on systemic stablecoins – the framework that will define how stablecoins are treated under banking regulation.