Bank of England Reveals Blueprint for UK Asset Tokenization

Tokenization is the process of bringing onto the blockchain other types of assets than cryptocurrencies. This helps bring to these assets the advantages of blockchain: almost instant transactions, permanent and public ledger, low transaction fees, anonymity, etc.

Tokenization can be used for all kinds of assets, from stocks to bonds, real estate, carbon credits, private companies’ shares, etc. You can read more about this process of tokenization of real-world assets (RWA) in our series “RWA Tokenization Guide: Real-World Assets on Blockchain” and in our article explaining how tokenization is upgraded to become quantum-proof.

Together with agentic pay, tokenization is expected to revolutionize payments and overall bring the benefits of blockchain technology to a much wider array of applications than just cryptos.

On May 19^th, 2026, the Bank of England published a speech by Sarah Breeden, Deputy Governor for Financial Stability, titled “Modernising money and markets“. It explains how the UK can build on its role as a central financial center to lead tokenization globally. This is an important shift from a central bank, as it illustrates the rapidly evolving stance of major institutions and regulators toward blockchain, tokenization, and cryptocurrencies.

Why The Bank Of England Cares About Tokenization

This speech comes in parallel to an initiative by the UK’s Financial Conduct Authority (FCA), which was revealed the same day: “Call for input: The future of tokenisation – a joint vision from the authorities for UK wholesale markets”.

As the world’s largest net exporter of financial services and fifth-largest economy, the UK sees itself as an important leader that needs to handle well the modernization of money and markets.

“I want to set out how the responsible adoption of tokenisation in the UK can enhance financial stability and support sustainable growth – not only in retail payments but also, especially given this audience, in financial markets and the services they provide to the UK and global economies.”

This effort is led by a joint task force of HM Treasury, the Bank, the FCA, and the Payment Systems Regulator. It aims to create a new infrastructure that will enable the seamless exchange between traditional and tokenised money.

For systemic stablecoins, the Bank will publish draft rules next month and finalise them by year-end, in line with the US timeline.

They also want to encourage banks to adopt these new technologies in the money they issue, as long as they issue stablecoins from a non-deposit-taking, insolvency-remote group entity.

However, these initiatives are not just to stimulate growth or maintain the position of the UK as a financial center. The Bank of England also considers that it has to be proactive. This is because the Bank of England sees the uncontrolled and unregulated development of a new financial system as a potential threat if handled poorly.

“A regulated financial system that does not deliver outcomes for the real economy at the technological frontier is vulnerable to new players and activities growing quickly outside the regulatory perimeter, or offshore. Those players can reach systemic scale fast, creating risks that are hard to address after the fact.”

The UK’s Vision Of Tokenization

A Proactive Stance

One key goal in the adoption and regulation of tokenization is an overall improvement of the payment system, with lower risks, and faster & cheaper settlements.

“Shared ledgers, updated near-simultaneously across all parties to a transaction, could make payments and settlement faster and cheaper, with fewer intermediaries, less operational risk, lower cost, and shorter settlement windows.”

Smart contracts are expected to allow greater customisation, conditionality, and automation, replacing the often still-manual post-trade services for collateral, coupon, and dividend payments.

Another improvement would be to have money and assets move systematically at the same time across a wider range of retail and wholesale use cases, not just current equities, bonds, and FX.

The plan also includes issuing a digital pound, a digital form of cash directly issued by the Bank of England.

But maybe the most groundbreaking idea is the central bank of a major economy openly welcoming “a multi-money system that promotes competition and choice between robust forms of money”.

“Alongside traditional bank deposits, people should be able to pay with tokenised bank deposits, regulated stablecoins and, potentially, a retail central bank digital currency. ”

Considering that central banks have historically been the most stern defenders of a centralized and tightly controlled form of state-issued money, this shows how far cryptocurrency and blockchain have changed the global financial landscape.

“Our focus is on dynamic, resilient markets in tokenised real-world assets – equities, bonds, funds, private assets and more – that can move more efficiently across the trade lifecycle, improving issuance, trading, clearing, settlement and collateral use.“

The intention is to make the UK a leader in setting up the infrastructure and the rules of a fully tokenized financial system.

In doing so, the UK can both leverage and preserve its role as a global financial center, notably by deferring to foreign financial authorities only where overseas rules deliver similar outcomes to the UK’s rules.

Example Of Fully Tokenized Finance

For retail payment, the traditional and tokenised money will be exchanged seamlessly and essentially instantly.

“When shopping online, a payment I make with a regulated systemic stablecoin could instantly credit the retailer’s bank account, but only once I confirm the parcel has been delivered.”

The same would be happening for wholesale payments, including internationally. The idea is to make payment a lot smoother, and use a smart contract to remove a lot of uncertainty and the need to rely on expensive third-party to handle trust and payments.

“A UK supplier to an overseas corporate could be paid automatically once delivery is confirmed, helping to tackle the late-payment challenge for small businesses. A mid-sized corporate treasury could invest excess cash overnight in tokenised securities for a fraction of a day, then sell them with near real-time settlement the next morning, widening cash management options.”

The Next Steps In Tokenization

Upcoming Schedule

Besides general intent, the Bank of England also set out in this speech the upcoming changes and actions regarding tokenization.

For systemic stablecoins, the Bank will publish draft rules next month (June 2026) and finalise them by year-end.

One option would be temporary guardrails on the total amount of a coin that could be issued. This approach would be reviewed regularly to lower the cost to the sector and allow a wider range of high-value payment use cases, including for corporates.

The Bank’s Prudential Regulation Authority (PRA) also reaffirmed its regulatory expectations around retail use of tokenization, insisting that banks are expected to adopt these new technologies, including tokenised deposits.

An important step in the deployment of tokenization in banks will be to ensure those deposits can be used for payments between banks, not just among customers of the same bank.

The Bank of England will consider whether tokenised assets should be eligible as collateral in the Sterling Monetary Framework (SMF), which would backstop the ability to monetise them in private markets.

In parallel, it will support settlement in central bank money against tokenised asset ledgers that could themselves run 24/7 over the coming years.

Lastly, they will be upgrading their internal systems in 2027 so they can connect directly to tokenised asset ledgers and the deployment of the digital pound will start after the end of 2026, when the design phase is concluded.

From Pilot Tests To Deployment

An important groundwork has been established with the Bank-FCA Digital Securities Sandbox (DSS), which launched in 2024 and runs until January 2029. It allows trading and settlement of tokenised securities with major players preparing launches.

This works across asset classes, including equities, corporate and government bonds, and investment funds. Sixteen firms are preparing to launch from later this year, with a route to permanent operation, including Euroclear, HSBC, and the London Stock Exchange Group, alongside other newer entrants.

The goal of the DSS was to allow meaningful activity, thanks to issuance limits for key digital securities markets set high enough to test, but not too high to safeguard financial stability.

Lastly, the UK central bank will also launch a digital gilt (UK bond) instrument (DIGIT), the first tokenised sovereign issuance by a G7 country.

AI Impact

While not the topic of this speech, AI has been briefly mentioned as well. The idea is that this will be a parallel, but ultimately connected effort to the tokenization of assets.

“We are also doing a great deal to support its responsible adoption. That includes agentic payments and commerce – where AI firms and payment companies are developing the technology and standards that would let me ask an AI agent to ‘book my holiday’, ‘refill my fridge’ or ‘refresh my wardrobe’; and agentic trading in financial markets.”

More information can be found on that topic in another document, “Response to TSC inquiry report on AI in financial services“.

“Far from taking a ‘wait and see’ approach, we have invested heavily in analysing the current and future risks posed by both (i) the use of AI in financial services and (ii) the broader investment in and adoption of AI across the wider economy.”

Tokenization In The UK And Beyond

Tokenization is no longer an idea pushed by adepts of cryptos or technical experts in blockchain technology. Instead, it is an integral part of the plans for the future of one of the world’s most important central banks and financial centers.

And this is now moving from the stage of analysis and pilot project to full deployment in all major banks and financial institutions, up to the highest level.

Overall, this is part of a “big bang” of financial infrastructures shaken by the emergence of blockchain, AI, cryptos, and an ever-increasing trend of financialization of the economy.

Contrary to other countries, the UK has taken an extremely proactive stance regarding tokenization. This could prove a decisive advantage in the struggle of keeping London as a major financial center, against the competition of the US and growing competition from Asian marketplaces, especially Chinese.

At the same time, it is likely that the tokenization framework from the central bank will only partially keep up with industry innovation and will initially focus on digital pounds and gilts, as well as interbank tokenized payments. This will still be a gigantic progress for a blockchain technology that was still mostly suppressed by governments as little as five years ago.