CryptoUK Response to FCA and Bank of England Call for Input: The future of tokenisation – a joint vision from the authorities for UK wholesale financial markets
CryptoUK and its members welcome the opportunity to respond to the FCA and Bank of England’s Call for Input on how the UK authorities can support the adoption of tokenised securities and how market infrastructure can support their issuance, trading, settlement and safekeeping.
CryptoUK is the UK’s self-regulatory trade association representing the cryptoasset sector. Our members comprise over 150 of the leading companies across the sector and across the UK. Many of our members are also international and engage with regulators and policy frameworks on a global basis.
Tokenised markets are inherently global. Firms, liquidity providers and infrastructure providers will decide where to commit capital, develop products and build the infrastructure to serve tokenised markets. If the UK framework is slower, less certain or more prescriptive than comparable regimes, activity will not wait for UK rules to settle; it will be built elsewhere, with UK authorities supervising less of the activity and UK firms having less influence over the standards that emerge. International competitiveness is therefore not separate from market integrity. The UK’s ability to set high standards depends in part on those standards being usable enough to keep responsible activity within supervised UK markets.
This response provides answers to each question raised in the Call for Input. Before turning to those questions, we have summarised the response through the ten policy areas used throughout the Appendix. The common position across those areas is that the UK should preserve market integrity, investor protection, financial stability and international competitiveness while making the route to tokenised market activity usable in practice. Function, risk and evidence should determine regulatory treatment, and tokenised arrangements should not be required to reproduce legacy processes where equivalent or better outcomes can be evidenced through different methods.
Authorised Fund Tokenisation And D2F
Authorised fund tokenisation is the clearest near-term proof point. The UK has begun to establish a basis for tokenised authorised funds, direct-to-fund dealing, primary on-chain records and tokenised eligible assets. The priority now is to make those routes usable in live workflows: subscription and redemption, investor record-keeping, wallet-native distribution, service-provider coordination and settlement. Investor protection should remain the controlling standard, but the framework should allow different operational methods where the same regulatory outcomes can be evidenced.
DSS And Permanent Settlement Regime
The Digital Securities Sandbox should become a functional route to live activity and permanent authorisation, not only an admission process. Despite 16 firms having passed Gate 1, no live transactions have yet been completed after approximately 18 months of operation. Firms need clear Gate 1 to Gate 2 criteria, target feedback timelines, commercially meaningful activity-limit principles, escalation routes for third-party dependencies and a defined path from sandbox evidence into permanent DSD or FMI authorisation standards.
Settlement Modernisation
Settlement remains one of the main constraints on tokenised markets. Tokenised securities, fund units and collateral cannot scale if the asset leg is programmable but the cash leg depends on narrow settlement hours, unclear settlement-asset eligibility or disconnected payment infrastructure. Central bank money should remain the anchor for systemic sterling settlement, but RTGS synchronisation is not expected until 2028 and other settlement assets will be needed where relevant risk outcomes are met. The roadmap should therefore cover RTGS synchronisation, tokenised deposits, regulated stablecoins, wholesale CBDC assessment and settlement-hours progression as connected workstreams.
Tokenised Money
The UK should develop coherent tokenised-money infrastructure in which regulated stablecoins, tokenised deposits, tokenised MMFs, tokenised gilts, RTGS synchronisation and any future wholesale CBDC each perform their respective functions without being treated as legally interchangeable. The market need is for regulated workflows that allow users to move between payment, settlement, treasury, collateral and yield-bearing states where the relevant standards are met. That requires clarity on stablecoin settlement, tokenised deposit treatment, tokenised MMF access, stablecoin yield or rewards, and tax or accounting issues that could otherwise prevent routine payment, settlement or treasury use.
Tokenised Collateral
Tokenised collateral should be treated as a priority because it determines whether tokenised assets can be used across wholesale markets rather than remaining standalone products. Firms will not build collateral systems, legal opinions, CCP rulebook changes, margin documentation, custody models and default-management processes on inferred permission alone. The authorities should publish UK EMIR and uncleared margin guidance, Bank SMF criteria and common evidence expectations, including the treatment of tokenised MMFs and tokenised gilts where legal and economic rights are comparable and tokenisation-specific risks are controlled.
DIGIT And Tokenised Gilts
DIGIT and tokenised gilts should be designed as reusable infrastructure proof points, not only as isolated pilots. Their value should be measured by the evidence and standards they generate for issuance, settlement, custody, FSCS treatment, provider criteria, collateral eligibility, lifecycle servicing, secondary-market transfer and interoperability with conventional gilt markets. The roadmap should preserve optionality for permanent tokenised gilt infrastructure by defining required capabilities rather than hard-coding one platform, provider model, settlement architecture or network type before evidence supports that choice.
SIC Custody And Ownership Records
SIC custody and ownership-record treatment need a defined timetable. The CFI confirms that firms seeking to provide SIC custody will need to be authorised for safeguarding activity under Article 9N and will be assessed against the applicable CASS 6 requirements for traditional safe custody assets. At the same time, the FCA is not taking forward its proposal to apply CASS 17 to SIC custody at this stage, and is considering whether a different longer-term safeguarding framework may be needed to reflect SIC-specific risks and the development of tokenised market structures. That creates a risk that firms delay investment or build against requirements that later change. The FCA should establish a dedicated SIC custody workstream covering interim CASS 6 treatment, FSCS, CASS 8, ownership-record integrity, targeted DLT overlays, mixed custody chains and transitional treatment.
Primary Issuance And Tokenised Equities
Tokenised primary issuance and tokenised equities could give UK issuers an additional supervised capital-formation route and make issuance, ownership records, voting, stewardship and corporate-action processing easier to connect with digital market infrastructure. That opportunity depends on resolving legal and practical barriers, including company law, register integrity, title systems and the distinction between native issuance, digital twins, SPV or proxy structures, contractual claims and synthetic exposure. CryptoUK would welcome an HMT, FCA and Bank workstream to identify where legislative or regulatory change is needed.
Interoperability
Interoperability will determine whether tokenised markets develop as usable infrastructure or as fragmented pilots. The roadmap should cover technical standards, authoritative records, legal finality, DvP and PvP, settlement assets, custody and control, collateral eligibility, reporting, supervisory data, audit and assurance, third-party standards and cross-border recognition. Standards should reduce fragmentation and protect users, but they should not hard-code incumbent rails, a single technology model or a domestic-only approach where comparable regimes can support mutual recognition or equivalent outcomes.
Accountability, Operational Resilience And Financial Stability
Accountability, operational resilience and financial stability should be applied by reference to regulated activity, control, legal effect and client or market-facing function. A regulated firm should not avoid responsibility by pointing to a blockchain or smart contract, but the framework should not require a separate accountable person behind every non-discretionary automated step. Public DLT reliance, DeFi-adjacent infrastructure, continuous trading, settlement-hours reform, valuation, margin and collateral management should be assessed through evidence-based standards that recognise both new risks and genuine reductions in legacy operational risk.
Across these areas, CryptoUK encourages the FCA, Bank of England, PRA and HMT to publish an integrated dependency map with deliverables, owners, evidence requirements, feedback loops and timelines. The priority should be to convert pilot evidence and early engagement into guidance, waiver or modification criteria, rule changes and authorisation standards. If the UK can convert this discipline into practical pathways for settlement, collateral, custody, interoperability, operational resilience, DIGIT, fund tokenisation and market functioning, it can become a genuine global leader in responsible tokenised market activity.
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