BoE and FCA publish Future of Tokenization report

BOE and FCA drop "Future of Tokenization" consultation report. Key takeaways.

1️⃣ The UK wants tokenized securities to become part of mainstream market infrastructure

The FCA and BoE explicitly describe tokenization as one of the most consequential changes to wholesale markets in decades and see it as a strategic opportunity for UK competitiveness. They envision tokenized securities, cash, and collateral moving through the entire market lifecycle, from issuance to settlement and collateral management.

2️⃣ "Tokenized and non-tokenized infrastructure will coexist and interoperate."

The authorities repeatedly reject the idea that all markets must migrate entirely on-chain. Existing FMIs, CSDs, custodians and exchanges will continue to play important roles alongside new digital infrastructure. 

3️⃣ Tokenized assets will generally receive the same regulatory treatment as traditional assets

For PRA-regulated firms, tokenized traditional assets should generally receive the same prudential treatment as traditional assets when legal rights and risks are equivalent.

The same principle is being applied to:

- Capital treatment

- Collateral eligibility

- CCP collateral frameworks

👉 This removes one of the largest barriers to institutional adoption.

Institutions don't want tokenized assets if they attract higher capital charges than the traditional version.

4️⃣  Tokenized collateral is moving toward regulatory acceptance

The BoE explicitly states a policy preference that tokenized versions of assets already accepted as collateral should generally remain eligible, provided risks are managed appropriately.

The paper specifically references:

- Tokenized MMFs

- Tokenized gold

- CCP collateral eligibility

- Bank of England collateral eligibility

👉 This is one of the strongest regulatory endorsements of the collateral mobility thesis seen globally.

The UK is effectively saying: if a Treasury, MMF, or gilt is acceptable collateral today, tokenization should not automatically make it ineligible.

5️⃣ DIGIT is becoming the UK's flagship tokenized securities project

The Digital Gilt Instrument (DIGIT) pilot is clearly the centerpiece of the government's strategy.

Authorities are supporting:

- On-chain sovereign issuance

- DSS infrastructure

- Potential collateral eligibility

- Settlement experimentation

👉 DIGIT is not being positioned as a one-off pilot. It is being positioned as the catalyst for broader tokenized capital market infrastructure.

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