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The FCA and the Bank of England want to move fast. Together, they’ve laid out a joint vision to push tokenisation and distributed ledger technology into the heart of UK wholesale markets — and they’re asking the industry to help shape what that looks like.
Tokenisation, at its core, means creating digital representations of real-world assets — shares, bonds, that sort of thing — on a digital ledger. The appeal is pretty straightforward: faster issuance, cleaner settlement, less friction across the board. Wholesale markets have been talking about this for years, but actual adoption has been slow, partly because firms haven’t had enough clarity on where regulators stand. The FCA and the Bank of England are trying to fix that. They’ve already addressed specific sticking points — prudential treatment of tokenised assets, how tokenised collateral gets handled — and they’re now inviting structured feedback from firms on what else is blocking progress. That feedback will feed into a broader roadmap for digital wholesale markets.
Simon Walls, the FCA’s executive director of markets, flagged the transformative potential tokenisation holds for wholesale asset markets. He pushed hard on the need for a unified regulatory approach — one that gives firms enough confidence to actually build, not just run pilots.
Bank of England Moves on Settlement and Collateral
Sarah Breeden, the Bank of England’s deputy governor for financial stability, said significant progress has already been made toward responsibly adopting tokenisation. But she was clear: moving from pilot projects to full-scale implementation needs both public and private sectors working together, with financial stability and sustainable growth staying front and center.
That’s not just talk. The Bank of England has launched a consultation on extending settlement hours for RTGS and CHAPS — proposing something close to round-the-clock operations. The idea is to support cross-border payments and new settlement models as tokenisation keeps evolving. It’s a big operational shift, and it’s probably one of the more concrete moves either institution has made so far.
The Prudential Regulation Authority has also stepped in. The PRA issued updated guidance on the prudential treatment of tokenised assets, bringing it in line with where markets actually are right now and confirming what risk management expectations look like going forward.
And there’s more in the pipeline. The Bank of England is working toward a live synchronization service — expected by 2028 — that will support the use of tokenised assets as collateral in central bank operations. That’s not a small thing. Getting tokenised assets accepted as collateral at the central bank level basically legitimises the whole infrastructure in a way that no private-sector pilot can.
Digital Securities Sandbox and the DIGIT Pilot
The Bank of England is already running a live testing environment. It’s collaborating with 16 firms through the Digital Securities Sandbox to facilitate the live issuance and settlement of tokenised assets. The goal is to integrate tokenised equivalents of eligible assets into both central counterparties and the Bank’s own operations — making the broader financial ecosystem more adaptable, not just more digital.
On top of that, the Bank is supporting HM Treasury’s pilot issuance of a digital gilt instrument, known as DIGIT. It’s a real-world test of what tokenisation looks like in government securities, and it’s probably the highest-profile practical application either institution has backed so far.
The FCA, meanwhile, isn’t standing still. It recently released a policy statement on advancing fund tokenisation, which fits into its wider push to bring digital assets properly into the UK financial landscape. It’s also committed to exploring changes to its client asset rules — known as CASS — in response to what it’s hearing from industry. Those rules matter a lot for how firms hold and manage client assets, so any changes there could have real downstream effects on how tokenised products get structured and sold.
The feedback period on current regulations and infrastructure closes July 3. A feedback statement is set to come out sometime in the summer after that.
Both institutions are continuing to engage with industry through the Digital Securities Sandbox — not just as a regulatory box-ticking exercise, but as a practical testing ground for building out the processes that secure, efficient tokenisation actually needs. Sixteen firms are already in that sandbox doing live work.
The synchronization service targeted for 2028 stays the biggest near-term commitment on the Bank of England’s side.
Frequently Asked Questions
What is the Digital Securities Sandbox and who is involved?
The Digital Securities Sandbox is a live testing environment run by the Bank of England in collaboration with 16 firms, focused on the issuance and settlement of tokenised assets in wholesale markets.
When does the FCA’s industry feedback period on tokenisation close?
The feedback period closes on July 3, with a feedback statement from the FCA expected to be published in the summer.
