UK Regulators Unveil Plans for Permanent Tokenized Markets

The UK Financial Conduct Authority (FCA) and Bank of England are moving forward with plans to establish permanent tokenized markets in the UK. The FCA received 123 responses to a joint call for input, which showed broad support for the regulators' approach but also highlighted the need for faster progress and clearer timelines.

According to the FCA, the roadmap will set out specific workstreams and target dates for the development of tokenized markets. Key areas include digital securities issuance and settlement, tokenized assets and collateral, access to central bank money settlement, market functioning, custody of relevant specified investment cryptoassets, and the Treasury's Digital Gilt Instrument pilot.

The FCA also acknowledged that post-trade activity, particularly collateral management, is a key opportunity for tokenization. This could lead to benefits such as 24-hour trading, atomic settlement, greater collateral mobility, and fewer reconciliations.