Tokenisation will reshape market infrastructure whatever we do – the question is whether the UK wants to shape it or adapt to decisions made elsewhere, writes Bob Wigley

The UK has entered a new phase in the tokenisation of capital markets. Recent moves by the government and regulators – from guidance on tokenised funds and collateral to the Chancellor’s plan for a Digital Gilt Issuance in 2027 and the Bank of England’s new secondary objective to support innovation in digital money – show a real and positive increase in momentum. 

But momentum is building elsewhere too, most notably in the US, with a combination of executive orders, an inclusive approach taken by regulators and the enactment of the GENIUS Act. 

UK should be the global leader in tokenisation

The prize is significant and the UK should aim to be the global leader. But there is a risk that the market forms elsewhere and we find ourselves adapting to standards and approaches set elsewhere rather than shaping them. This is particularly important now as we move beyond proof-of-concepts to illustrate that the technology works and into a debate about how to drive adoption on an institutional scale. 

This involves questions around operating models, shifting market liquidity and how to manage the transition from the old rails to the new ones, including where it will be gradual with an analogue and tokenised system side by side and where a big bang approach is possible. 

One key area where tokenisation could deliver real benefit is in wholesale fixed-income markets, where current inefficiencies generate unnecessary costs. Nasdaq data suggests that more efficient collateral mobilisation could materially reduce collateral requirements, by up to 30 per cent in some instances. 

The good news is that this is an area where the UK starts from a position of strength. According to the BIS Triennial Central Bank Survey 2025, the UK accounts for 50 per cent of global OTC interest-rate derivatives turnover and 38 per cent of OTC foreign exchange turnover. If tokenisation reshapes wholesale markets, the UK is well placed to help define what comes next. 

We will not be rewarded for sitting back

But leadership will not emerge organically. It requires co-ordination, clarity and focus. That is why UK Finance, working with Oliver Wyman, engaged policymakers, regulators and industry to assess progress and identify what must come next. 

Four priorities emerged: having a clear and overarching vision, aligning digital money and tokenisation strategies, empowering the Digital Markets Champion and concentrating efforts on priority areas. 

Let’s start with the need for a vision. We have the individual building blocks, from government and regulatory engagement through to market expertise and technological capability. Overlaid onto them should be a vision that defines the long-term market end-state; identifies priority use cases; establishes measurable indicators of progress; and provides a mechanism for public-private coordination across regulators, market infrastructures and market participants. 

Second, every tokenised transaction has a cash leg, but the full benefits of tokenisation are only unlocked when the cash leg is as digital as the asset leg. The job is not to pick one winner. Private sector (tokenised deposits and stablecoins) and central bank money options should each continue to innovate and progress, with the focus being on engagement and encouraging interoperability. 

Third, the Digital Markets Champion’s remit needs to move beyond co-ordination and reporting. The creation of this role and his early work are very welcome developments. The next step should be to give the role real teeth in terms of decision-making powers, and a mechanism to drive action across public and private sectors. 

Finally, scale comes from focus. Concentrating on priority areas such as sovereign debt, money market instruments, repo and collateral management and FX will generate the network effects and institutional momentum needed for wider adoption. The alternative – dispersed activity delivered all at once – risks dissipating effort across too many use cases and asset classes. 

The UK’s capital markets may be smaller than those of the US, but they are deep, global and highly specialised, 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. Tokenisation will reshape market infrastructure – the question is whether we want to shape it or adapt to decisions made elsewhere. 

Now is the moment to choose leadership.

Bob Wigley is the chairman of UK Finance