UK moves to scale tokenisation in capital markets

By Aarav Garg

Tokenisation is moving closer to mainstream adoption in UK wholesale finance after the Financial Conduct Authority and the Bank of England outlined a joint approach aimed at giving financial institutions greater regulatory clarity around digital assets and distributed ledger technology (DLT).

The two institutions published a shared vision for tokenisation in wholesale markets, alongside a request for industry feedback on how regulation and financial infrastructure should evolve as adoption increases. The initiative focuses on creating clearer frameworks for areas including tokenised collateral, settlement assets and prudential treatment of digital asset exposures.

Tokenisation refers to the creation of digital representations of financial assets such as bonds, equities or currency on distributed ledgers. Regulators said the technology could improve efficiency across capital markets by streamlining issuance, trading, settlement and asset servicing processes, while also lowering operational costs and improving resilience.

The move reflects a broader shift in financial services as banks, asset managers and market infrastructure providers increasingly explore blockchain-based workflows beyond pilot projects. UK regulators are now signalling support for moving tokenisation from experimentation toward scaled deployment in wholesale finance.

Alongside the joint framework, the Prudential Regulation Authority issued updated guidance on the treatment of tokenised assets, stablecoins and digital deposits, while the Bank of England launched a consultation on extending RTGS and CHAPS settlement hours toward near 24/7 availability. The proposals are intended to support emerging digital settlement models and cross-border payment activity.

The FCA also confirmed further work on adapting client asset rules to tokenised markets following industry feedback and recent fund tokenisation initiatives.

For FinTech firms, market infrastructure providers and digital asset platforms, the announcements suggest the UK is positioning itself to support institutional adoption of tokenised finance through clearer regulation, upgraded settlement infrastructure and closer coordination between financial regulators and industry participants.

Richard Baker, CEO & Founder of Tokenovate, commented, “Today’s FCA and Bank of England announcement accelerates the move of UK tokenisation from policy to production, giving firms greater certainty around regulation, collateral and settlement. The Bank’s planned synchronisation service is especially encouraging. By coordinating cash and asset movements, it tackles one of the key infrastructure challenges in tokenised markets. The focus must now be on making sure tokenisation operates continuously and consistently across venues, rather than adding another layer to fragmented post-trade processes.”