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FCA and Bank of England Set Out Vision for the Future of Tokenised Financial Markets
The FCA and the Bank of England have outlined a coordinated strategy designed to support the responsible adoption of tokenisation and distributed ledger technology across UK wholesale financial markets.
Tokenisation enables real-world assets — such as shares, bonds and currencies — to be digitally represented on distributed ledgers. The technology has the potential to modernise financial markets by making the issuance, trading and settlement of assets faster, more efficient and more resilient.
Driving Innovation in UK Financial Markets
As tokenisation continues to evolve, industry participants have called for greater clarity around regulation, infrastructure and operational standards. In response, the FCA and the Bank of England have outlined their approach in key areas including prudential treatment, tokenised collateral and settlement mechanisms.
The regulators have also launched a wider discussion on the principles that should guide the future regulation and infrastructure of digital wholesale markets in the UK.
“Tokenisation has the potential to transform wholesale markets — reshaping how assets are issued, traded and settled. We want to support firms in adopting this technology to lower costs, reduce risk and unlock new services.”
“Our partnership with the Bank of England will help ensure a consistent approach across the market and provide the clarity firms need to innovate with confidence.”
— Simon Walls, Executive Director of Markets, FCA
Building the Foundations for Digital Finance
The Bank of England highlighted the progress already made in supporting responsible innovation in both retail and wholesale finance, while emphasising the importance of collaboration between regulators and industry participants.
“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.”
— Sarah Breeden, Deputy Governor for Financial Stability, Bank of England
The FCA and the Bank are now seeking industry feedback on where current rules and infrastructure either support or limit the safe adoption of tokenisation technologies. Responses will help shape a future joint roadmap for digital wholesale markets in the UK.
Supporting Action Across the Financial Sector
Alongside the initiative, the Bank of England has launched a consultation on extending RTGS and CHAPS settlement hours, paving the way for near 24/7 settlement capabilities. The proposed changes aim to support cross-border payments and future digital settlement models as tokenisation adoption expands.
The Prudential Regulation Authority (PRA) has also issued updated guidance covering the prudential treatment of tokenised assets, as well as innovations involving deposits, e-money and stablecoins. The guidance reinforces expectations around compliance, governance and risk management.
In addition, the FCA has committed to further work supporting tokenisation in the UK, including reviewing how client asset protection rules (CASS) may evolve in response to industry developments and feedback.
The initiative reflects the UK’s ambition to remain at the forefront of global financial innovation while ensuring that emerging technologies are adopted safely, responsibly and in a way that supports long-term market resilience.