UK announces plan to scale tokenisation of wholesale financial markets<\/p>\n
Chris Woolard CBE, HM Treasury\u2019s Wholesale Digital Markets Champion, supported by City of London Corporation, delivers inaugural sector report to the Chancellor and convenes 54 UK businesses to deliver programme of workReport sets out key actions for industry, supported by government and the UK regulators, to tokenise UK financial markets at scale \u2013 including building secondary markets, tokenising collateral and building on the issuance of DIGIT, the UK Digital Gilt instrumentTokenisation could add hundreds of billions of pounds of economic value to the UK economy by 2035<\/p>\n
The UK\u2019s Wholesale Digital Markets Champion, Chris Woolard, has today (13 July) published his inaugural report (09:00 13 July) to the Chancellor, setting out how the UK could accelerate the adoption of tokenisation and related technologies across wholesale financial markets \u2013 and generate significant economic growth for UK Plc.<\/p>\n
Wholesale financial markets are a fundamental driver of economic growth, directly supporting jobs and financing activity in the wider economy. Tokenising wholesale markets will boost the UK\u2019s competitiveness, generating additional liquidity and revenues, securing cost and capital efficiencies, enabling innovation, and strengthening the resilience of the financial system.<\/p>\n
The UK has already made strong progress through a series of pilots and small-scale commercial trials, but given international competition, accelerated pace is needed to secure its leading role in shaping the next generation of global market infrastructure.<\/p>\n
Estimates put the tokenised real-world assets market at $88 trillion by 2035. The scale of the market \u2013 combined with other benefits of tokenisation \u2013 could result in a sizeable economic benefit for the UK. Up to \u00a333 billion could be added to the UK\u2019s annual economic output and \u00a314 billion in annual tax revenues by 2035.<\/p>\n
Wholesale Digital Markets Champion, Chris Woolard said:<\/p>\n
\u201cAs one of the world\u2019s largest and most international financial services markets, the UK is uniquely placed to become the global leader in wholesale market tokenisation. There is so much potential, technologically and economically, if the right actions are taken and decisions are made now to embrace and support tokenisation.\u201d<\/p>\n
Policy Chairman of the City of London Corporation, Chris Hayward said:<\/p>\n
\u201cThe UK has a once-in-a-generation opportunity to lead a digital Big Bang in financial services.<\/p>\n
\u201cBy accelerating the adoption of tokenisation across our wholesale markets, we can build the market infrastructure of the future, set global standards, and reinforce UK\u2019s position as the world’s leading international financial centre.\u201d<\/p>\n
Chancellor of the Exchequer, Rachel Reeves said:
\u201cThe UK is already a world leader in global finance and keeping that top spot means harnessing technologies like tokenisation. It will make our markets even more competitive, attract investment to the economy, and drive growth across the UK.\u201d<\/p>\n
The UK is well placed to remain at the forefront of global financial markets, championing trusted legal and regulatory frameworks, globally significant financial markets intermediaries and a strong innovation ecosystem. To enable the adoption of tokenisation at scale, pace, clear regulatory, legal and tax frameworks, conditions for interoperability (domestically and internationally) \u2013 all in a joined-up national vision \u2013 are a must.<\/p>\n
The report sets out a framework for practical action led by industry, in coordination with government and regulators, to move from experimentation to scalable live markets. It sets out clear priorities and actions, identified through extensive industry engagement. These include primary issuance (including DIGIT), tokenised collateral, tokenised funds, payment rails for digital markets, legal and regulatory certainty, interoperability standards, financial crime compliance, tax neutrality and resilience.<\/p>\n
Over the next 12 months, the members of the cross-industry taskforce \u2013 currently consisting of 54 firms \u2013 will be working with the Wholesale Digital Markets Champion. They will be supported by the City of London Corporation, working closely with industry partners: TheCityUK, the Investment Association, UK Finance, Innovate Finance. The taskforce will drive delivery of live end-to-end use cases, focusing initially on tokenised repo. Nine Action Groups will be set up to deliver on priority areas across the market value chain and develop cross-cutting best practice standards.<\/p>\n
The firms supporting the work of the Digital Markets Champion and the City Corporation are:<\/p>\n
Ava LabsAviva InvestorsBaillie GiffordBarclaysBlackRockBloombergBNP ParibasBPXCalastoneCboe Global MarketsChainalysisCircleCitadel SecuritiesCitiClearBankClearstreamClearTokenCoinbaseCtrl AltDeutsche BankDigital Asset \/ CantonDTCCEuroclear UK & International (CREST)Fidelity InternationalFireblocksFnalityGFO-XGoldman SachsHSBCIntercontinental Exchange (ICE)InvescoJane StreetJ.P. MorganKinexys by J.P. MorganKraken (Payward)Legal & General Asset ManagementLloyds Banking GroupLME ClearLSEG and LCHMobiusMontis DigitalMorgan StanleyNorthern TrustOptiverRippleSchrodersSLIXStandard CharteredState StreetTokenovateTradewebUBSUbyxWintermute
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