UK Finance has called for a single national roadmap to accelerate the adoption of tokenised wholesale markets, arguing that the UK has built many of the necessary foundations but has yet to turn them into activity at scale.

The trade body’s report, produced with consultancy Oliver Wyman, warns that the next phase of development will be determined by whether the UK can move beyond pilots and create repeatable issuance, settlement, collateral and trading activity.

The report says the UK risks seeing market infrastructure designed, governed and priced elsewhere if jurisdictions including the US, Singapore, Hong Kong and Switzerland establish deeper liquidity and stronger commercial momentum first. Financial and related professional services contribute approximately £290 billion of annual gross value add to the UK economy, the report says.

Four priorities for adoption

UK Finance’s recommendations are built around four areas.

  • A single vision for digital wholesale markets, covering digital assets, money and financial obligations together, the report argues, rather than letting them develop as separate initiatives across disconnected infrastructure.
  • Closer coordination between digital money and tokenisation strategies. Tokenised securities require a corresponding settlement asset, such as tokenised commercial-bank deposits, regulated stablecoins or central-bank money, and UK Finance says greater clarity on how those forms of digital money will interoperate is needed before firms commit to building at scale.
  • Greater authority and resources for the Digital Markets Champion, the role created to coordinate the UK’s wholesale digital-markets strategy, with clearer accountability across the public and private sectors, the report says.
  • A limited number of priority markets: sovereign debt, repo, collateral management, money markets and foreign exchange, where the UK already has significant expertise and where tokenisation could produce practical benefits.

Bob Wigley, chair of UK Finance, said: “The UK’s capital markets are deep, global and highly specialised, and backed by a strong legal and regulatory framework. By focusing on wholesale fixed income markets and by committing to the right architecture, governance and coordination, the UK can lead the next phase of financial innovation.”

Jason Ekberg, partner and global digital assets lead at Oliver Wyman, said the opportunity was to connect digital assets, money and market infrastructure rather than develop them in isolation.

From issuance to collateral

The report says the market’s focus has shifted since UK Finance’s previous tokenisation report in 2023.

Early activity centred on proving that distributed-ledger technology could support the issuance and settlement of regulated securities. UK Finance says that debate is now largely settled: tokenised securities can be issued, transferred and settled within regulated environments.

The more difficult question is whether those assets can achieve liquidity and become useful across the wider financial system.

The report identifies collateral mobility and balance-sheet efficiency as among the strongest potential use cases. Banks, asset managers, insurers and clearing houses move large volumes of securities and cash to support derivatives, repo and other funding transactions. Those processes are often split between custodians, central securities depositories and internal systems, creating reconciliation work, settlement delays and additional liquidity buffers.

Tokenised collateral could allow firms to transfer, pledge and release assets more quickly, including outside traditional market hours. Smart contracts could also automate eligibility checks, margin calls and collateral substitutions.

UK Finance cites industry estimates that around $28 trillion of assets are currently used as collateral globally, and says more efficient mobilisation could reduce collateral buffers by between 12% and 30% in some use cases, although the benefit would vary by institution and market.

The UK’s existing strengths in repo, derivatives, foreign exchange and custody give it a potential advantage, the report says. But it warns that closed digital platforms could leave collateral trapped in separate systems unless custodians and market infrastructures develop interoperable standards.

The UK’s progress and gaps

The report credits the UK with making progress since 2023. It points to the Digital Securities Sandbox, the development of tokenised deposits, the Fnality payment system and work by the FCA and Bank of England on the future of tokenised wholesale markets.

The Digital Securities Sandbox, a joint FCA/Bank of England initiative, gives firms a regulated environment in which to test the issuance, trading and settlement of digital securities. Sixteen firms have joined the sandbox, the report says, with the first participant having progressed to Gate 2.

It also highlights DIGIT, the planned tokenised UK government security. The Chancellor confirmed at Mansion House that the first DIGIT issuance is expected by the first quarter of 2027, with further issuances to follow if it succeeds. UK Finance argues that a digital gilt could help establish common market practices and create a high-quality asset for the wider tokenised-market ecosystem.

The report says these developments have improved the UK’s position, but remain insufficient on their own. It identifies continuing gaps around custody, liability, asset portability, interoperability, collateral eligibility, secondary-market liquidity and the route from the sandbox to a permanent regulatory regime.

The report also cautions that tokenisation won’t automatically create new demand or liquidity.

“Tokenisation does not by itself create new economic rights, liquidity or investor demand,” it says. “Those outcomes still depend on the legal structure, distribution model, market infrastructure and commercial use case.”

A short window for delivery

The report presents the next 12 months as a critical period for the UK to coordinate its existing initiatives.

It points to other jurisdictions that have combined government sponsorship, regulatory clarity and private-sector investment. The US has attracted activity in tokenised Treasuries and money-market products, while Singapore, Hong Kong and Switzerland have developed public-private programmes around tokenised securities, digital money and settlement infrastructure.

UK Finance doesn’t argue that the UK needs to copy any one of those models. Instead, it says the UK should connect its own strengths in common law, wholesale finance and market infrastructure into a coherent delivery programme.

The practical test will be whether the recommendations produce recurring transactions rather than another round of isolated demonstrations. The report specifically points to the need for repeat issuance, secondary-market activity, repo transactions and the use of tokenised securities as collateral.

Wigley added: “Tokenisation will reshape market infrastructure: the question is whether the UK wants to shape it or adapt to decisions made elsewhere.”

The report’s publication follows wider UK work on tokenised wholesale markets, including the FCA and Bank of England’s joint vision and call for input published in May, and the Digital Markets Champion’s programme for an end-to-end tokenised repo trial by spring 2027.

The immediate challenge is less about proving that tokenisation works than deciding who is responsible for turning the UK’s existing pilots and policy commitments into functioning, liquid markets.