The Financial Conduct Authority (FCA) and Bank of England have unveiled a joint strategy to support tokenization in UK wholesale markets, offering financial firms greater clarity on adopting distributed ledger technology. In a press release issued on Monday, the regulators said tokenization, the creation of digital versions of real-world assets on blockchain-based ledgers, could make wholesale markets more efficient by streamlining asset issuance, trading and settlement. The authorities outlined their approach to areas such as prudential treatment, tokenized collateral and settlement instruments, while launching a discussion about future market infrastructure and regulation. According to the regulators' statement, this consultation forms part of a broader UK digital financial markets strategy focused on tokenized securities and post-trade infrastructure, with authorities emphasizing that tokenization presents significant opportunities in post-trade processes and collateral management. The consultation represents a significant step in adapting wholesale financial market rules to accommodate tokenized assets and related infrastructure.
The Bank of England launched a consultation to move the Real-Time Gross Settlement (RTGS) service toward near-24/7 operation, with a staged approach including weekend and extended daily operating windows, subject to consultation and industry readiness. This shift is intended to support new payment and settlement models as tokenization evolves, with the BOE also committed to launching a live synchronization service targeted for 2028, working to enable tokenized equivalents of already eligible assets as collateral at central counterparties and in its own central bank operations. The proposal seeks to add weekend and extended daily operating hours to the central bank's settlement mechanism, Real-Time Gross Settlement (RTGS) and the Clearing House Automated Payment System (CHAPS), with the expanded operating hours specifically designed to support cross-border payments and new payment and settlement models based on tokenization developments. The consultation will support cross-border payments and new payment and settlement models based on tokenization developments, according to the joint letter published on Monday.
The Prudential Regulation Authority (PRA) issued updated guidance proposing that tokenized financial instruments receive the same regulatory treatment as their traditional equivalents when legal rights and risks are comparable, replacing prior guidance issued in 2022. The PRA said the letter would serve as interim guidance until it publishes a broader prudential framework following the Basel Committee on Banking Supervision's (BCBS) targeted review of banks' crypto asset exposure standards. The BCBS launched the review in November 2025 to examine the prudential treatment of tokenization, stablecoins and permissionless blockchains, with updates expected later this year. The PRA expects to consult on a proposed long-term framework in 2028 at the earliest, with crypto regulation largely falling under the FCA, the country's primary financial markets regulator. The FCA separately opened a public consultation on its crypto regulatory regime on April 30, focusing on stablecoin issuance, trading, custody and staking, with the regulator expected to fully implement the framework by October 2027.
The consultation runs alongside the Digital Securities Sandbox, where the FCA and Bank of England are working with 16 firms on live issuance and settlement of tokenized assets. As reported by BlockBeats, the sandbox provides firms with a controlled space to test distributed ledger technology in regulated market infrastructure, with tokenization enabling faster and more efficient issuing, trading, and settling of assets. FCA Markets Director Simon Walls stated that "Tokenisation has the potential to transform wholesale finance and help the UK remain globally competitive," while Bank of England Deputy Governor Sarah Breeden emphasized the next task is moving "from pilots to production." The sandbox is being expanded to include tokenized deposits and regulated stablecoins as settlement assets, with the Digital Securities Sandbox already operating as a live regulated environment for testing tokenized securities. Clients include banks, investment firms, asset management institutions, central securities depositories (CSDs), central counterparty clearing houses (CCPs), trading platforms, and fintech companies, with the current scope primarily covering tokenized bonds, stocks, and fund shares, with potential future expansion.
According to the regulators' statement, the government's Wholesale Financial Markets Digital Strategy (WFMDS) identified tokenization as a significant opportunity – particularly in post-trade processes and collateral. The regulators emphasized that this joint framework builds directly on that strategy and supports the role of the government's recently appointed Wholesale Digital Markets Champion. After the July 3 deadline, the FCA and Bank of England will hold industry workshops, publish a feedback statement in the summer of 2026, and issue a cross-authority roadmap for digital wholesale market development later in the year, with the authorities aiming for a cross-authority roadmap for digital wholesale market development by late 2026. Bank of England Deputy Governor Sarah Breeden noted that "The Bank and FCA have done a huge amount to enable the responsible adoption of tokenization in retail and wholesale finance in the UK, working with the government and the industry. The task now is for public and private sectors together to build on these strong foundations, moving from pilots to production to support financial stability and sustainable growth." Industry experts have welcomed the initiative, with Katie Harries, head of policy for Europe at Coinbase, telling Cointelegraph that "Fantastic to see the UK setting out a clear vision for tokenization in wholesale markets. The opportunity is huge — not only for companies seeking new pools of capital, but for the 'unbrokered' — the many individuals globally who are not able to participate in capital markets today."
