• Chris Woolard CBE, HM Treasury’s 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 work
• Report sets out key actions for industry, supported by government and the UK regulators, to tokenise UK financial markets at scale – including building secondary markets, tokenising collateral and building on the issuance of DIGIT, the UK Digital Gilt instrument
• Tokenisation could add hundreds of billions of pounds of economic value to the UK economy by 2035

The UK’s Wholesale Digital Markets Champion, Chris Woolard, has published his inaugural report to the Chancellor, setting out how the UK could accelerate the adoption of tokenisation and related technologies across wholesale financial markets – and generate significant economic growth for UK Plc.

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’s competitiveness, generating additional liquidity and revenues, securing cost and capital efficiencies, enabling innovation, and strengthening the resilience of the financial system.

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.

Estimates put the tokenised real-world assets market at $88 trillion by 2035. The scale of the market – combined with other benefits of tokenisation – could result in a sizeable economic benefit for the UK. Up to £33 billion could be added to the UK’s annual economic output and £14 billion in annual tax revenues by 2035.

Wholesale Digital Markets Champion, Chris Woolard said:

“As one of the world’s 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.”

Policy Chairman of the City of London Corporation, Chris Hayward said:

“The UK has a once-in-a-generation opportunity to lead a digital Big Bang in financial services.

“By accelerating the adoption of tokenisation across our wholesale markets, we can build the market infrastructure of the future, set global standards, and reinforce UK’s position as the world’s leading international financial centre.”

Chancellor of the Exchequer, Rachel Reeves said:
“The 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.”

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) – all in a joined-up national vision – are a must.

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.

Over the next 12 months, the members of the cross-industry taskforce – currently consisting of 54 firms – 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.

The firms supporting the work of the Digital Markets Champion and the City Corporation are:

• Ava Labs
• Aviva Investors
• Baillie Gifford
• Barclays
• BlackRock
• Bloomberg
• BNP Paribas
• BPX
• Calastone
• Cboe Global Markets
• Chainalysis
• Circle
• Citadel Securities
• Citi
• ClearBank
• Clearstream
• ClearToken
• Coinbase
• Ctrl Alt
• Deutsche Bank
• Digital Asset / Canton
• DTCC
• Euroclear UK & International (CREST)
• Fidelity International
• Fireblocks
• Fnality
• GFO-X
• Goldman Sachs
• HSBC
• Intercontinental Exchange (ICE)
• Invesco
• Jane Street
• J.P. Morgan
• Kinexys by J.P. Morgan
• Kraken (Payward)
• Legal & General Asset Management
• Lloyds Banking Group
• LME Clear
• LSEG and LCH
• Mobius
• Montis Digital
• Morgan Stanley
• Northern Trust
• Optiver
• Ripple
• Schroders
• SLIX
• Standard Chartered
• State Street
• Tokenovate
• Tradeweb
• UBS
• Ubyx
• Wintermute

Source: City of London