TLDR
- UK launched a 54-firm taskforce for wholesale market tokenization.
- BlackRock, Goldman Sachs and JPMorgan joined the UK taskforce.
- The group will work on live tokenization use cases for 12 months.
- Tokenized repo will be the taskforce’s first market use case.
- UK officials estimate tokenization could add £33B in annual output by 2035.
The United Kingdom has launched a 54-firm tokenization taskforce backed by HM Treasury and the City of London Corporation, bringing major banks, asset managers and crypto firms into a one-year program focused on live wholesale market use cases.
UK Pushes Tokenized Wholesale Markets
HM Treasury’s Wholesale Digital Markets Champion, Chris Woolard, published his first sector report on July 13, setting out a plan to expand tokenization across UK wholesale financial markets. The program aims to move the market beyond small pilots and into live use cases with support from industry, government and regulators.
The taskforce includes BlackRock, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, UBS, Barclays, Coinbase, Kraken, Ripple, Standard Chartered, State Street, Citi, Deutsche Bank, Circle, Chainalysis and several market infrastructure firms. The City of London Corporation will support the work alongside TheCityUK, UK Finance, the Investment Association and Innovate Finance.
The group will spend the next 12 months working on practical tokenization use cases. The first area of focus will be tokenized repo, a market where financial firms borrow and lend cash against collateral, often for short-term funding.
Nine action groups will cover different parts of the market value chain. Their work will include primary issuance, tokenized collateral, tokenized investment funds, digital payment rails, legal certainty, tax treatment, compliance, interoperability and operational resilience.
Woolard said tokenized markets are a “network game” and added that the UK must move quickly to keep a role in international market design. He said the UK needs to move “at the speed of the most agile players” to help shape future wholesale markets. That remains a policy goal, while the taskforce still needs to deliver working systems across regulated markets.
DIGIT and Tokenized Repo Lead the Plan
The report places DIGIT, the UK’s planned Digital Gilt instrument, at the center of the tokenization push. A government debt instrument issued in distributed ledger form could give the market a high-quality tokenized asset for collateral and settlement experiments.
John Orchard, chairman of the Digital Monetary Institute at OMFIF, said the UK government’s commitment to issue its own debt in DLT form is an important difference from some other markets. He called DIGIT a “high quality ‘safe’ asset” that could help build a wholesale capital market around tokenization.
The taskforce’s first live use case will focus on tokenized repo. That choice links tokenization to one of the core funding markets used by banks, asset managers and other financial institutions.
The report said tokenization could improve settlement, liquidity management and collateral movement. Those gains depend on whether tokenized assets can move across systems, settle with regulated money and meet legal and compliance rules.
Kirit Bhatia, chief digital assets officer at Banking Circle, said tokenized assets will need payment systems that support real-time settlement, cross-border transfers, regulated money and interoperability. He warned that without that infrastructure, digital assets could become faster at the edges while still being limited by older market systems.
UK Seeks Growth From Tokenized Assets
The report estimates that tokenization could add up to £33 billion to annual UK economic output and £14 billion in annual tax revenue by 2035. It also cites forecasts that the global tokenized real-world asset market could reach $88 trillion by 2035.
Chris Woolard said the UK is “uniquely placed to become the global leader in wholesale market tokenisation.” He said the opportunity could be technological and economic, but only if decisions are made now to support tokenized markets.
City of London Corporation Policy Chairman Chris Hayward said the UK has a “once-in-a-generation opportunity” to lead a digital shift in financial services. Chancellor Rachel Reeves said tokenization could make UK markets more competitive and help attract investment.
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