Tokenisation is no longer a question of future potential. The focus is now on implementation.
Over the past year, momentum behind the UK's wholesale digital markets agenda has accelerated. Our ‘No time to lose’ report with PwC set out a clear ambition for reinforcing the UK's global leadership in financial and related professional services, identifying tokenisation as one of the technologies that will shape the future competitiveness of wholesale markets. More recently, the FCA and Bank of England's call for input on the future of tokenisation outlined a long-term vision for the development of tokenised wholesale financial markets.
The publication of the Wholesale Digital Markets Champion Chris Woolard CBE’s first report is the next step in that journey. Rather than asking why tokenisation matters, it focuses on how the UK can move from successful innovation to market-wide adoption.
We have been pleased to contribute throughout this process as part of the industry secretariat supporting Chris and the Industry Taskforce, alongside the City of London Corporation and other partners. We have helped convene industry expertise to develop practical recommendations for the UK's wholesale digital markets ecosystem. This builds on our broader work to support innovation, competitiveness and long-term growth across financial and related professional services.
The report reinforces the scale of the opportunity. Tokenised real-world assets could reach $88trn globally by 2035 and, if the UK establishes itself as a leading jurisdiction, tokenisation could generate up to £33bn in additional annual economic output alongside significant gains in productivity, efficiency and capital mobilisation.
But the report is equally clear that these outcomes are not inevitable. While the UK benefits from deep capital markets, trusted legal frameworks and a strong record of financial innovation, other jurisdictions are moving quickly to establish the infrastructure, standards and regulatory frameworks that will underpin digital markets. The next phase will depend on pace, coordination and implementation.
Encouragingly, the UK already has much to build on. The Digital Securities Sandbox (DSS), the Digital Gilt Instrument (DIGIT) Pilot and a growing number of industry-led tokenisation initiatives have demonstrated that regulated firms can issue, trade and settle tokenised assets within existing legal and regulatory frameworks. The challenge now is scaling these successes into functioning markets with sufficient liquidity, interoperability and commercial confidence.
This is where the Digital Markets Champion's report makes its greatest contribution. It moves beyond high-level ambition by setting out a structured programme of work for the year ahead. Nine industry-led Action Groups will focus on the practical building blocks needed to support adoption, from primary issuance, secondary markets and tokenised collateral to payment infrastructure, legal certainty, tax, operational resilience, interoperability and financial crime compliance.
Central to that programme is the delivery of an end-to-end tokenised repo transaction. Demonstrating a live transaction across issuance, collateral, settlement and payments will help identify where barriers remain and where common standards are needed. The report also calls for greater use of tokenised collateral, interoperable technical standards, payment rails that support digital assets, technology-neutral tax treatment and a clear pathway from regulatory innovation initiatives into permanent market frameworks.
These recommendations closely reflect TheCityUK's priorities. In our ‘No time to lose’ report, we called for the UK to create an environment where firms have the confidence to invest, innovate and scale emerging technologies. Our response to the FCA and Bank of England's call for input similarly emphasised the importance of regulatory clarity, interoperability, commercially viable use cases and continued collaboration between industry and the authorities.
The publication of the Wholesale Digital Markets Champion's report should therefore be seen as the beginning of the delivery phase. The strategic direction is increasingly aligned across government, regulators and industry. The task now is to maintain momentum, implement the recommendations and ensure the UK remains the jurisdiction of choice for digital wholesale financial markets. We look forward to continuing to work with Chris in his role as Wholesale Digital Markets Champion, HM Treasury, regulators and industry partners to help turn this shared ambition into lasting market change.
