The United Kingdom could add as much as 33 billion British pounds ($44 billion) to its annual economic output by 2035 by becoming a leader in tokenized financial markets, according to a government-backed industry task force. The estimate appears in the first report from Wholesale Digital Markets Champion Chris Woolard, who was appointed by HM Treasury to help implement the government’s digital markets strategy.
Developed with an industry task force of more than 50 companies from traditional finance and crypto—including BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley, HSBC, UBS, Coinbase, Circle, Ripple, Kraken, DTCC and Euroclear—the report sets out a 12-month plan to test blockchain in a financial transaction where securities are used to borrow cash. It also calls for the UK to issue its first tokenized government bond by the first quarter of 2027.
The roadmap attempts to move UK tokenization beyond isolated pilots and into live markets where securities can be traded, settled and used as collateral. The report said the task was now to move “from pilots to scale” and “from ambition to action.”
Background on tokenization and digital assets
Tokenization refers to the process of representing real-world assets, such as bonds, stocks or real estate, as digital tokens on a blockchain. This enables faster settlement, reduced costs, greater transparency and the ability to use assets as collateral in decentralized finance (DeFi) protocols. The UK has been exploring tokenization for several years, with the Financial Conduct Authority (FCA) running a Digital Securities Sandbox since early 2024 to allow firms to test tokenized securities under relaxed regulations.
Globally, tokenization is gaining traction. The Bank for International Settlements (BIS) has conducted multiple experiments on tokenized cross-border payments and securities settlement. In the private sector, firms like JPMorgan have launched tokenized deposits and repo transactions on blockchain networks such as Onyx. The European Union’s Distributed Ledger Technology (DLT) Pilot Regime, which began in 2023, allows market infrastructures to operate using DLT for trading and settlement of tokenized securities. Pilot applications have been approved for platforms like Deutsche Börse’s D7 and the Spanish stock exchange’s BME.
The UK’s approach has been somewhat slower than some European peers but is accelerating with the task force report. The government first announced the Digital Gilt Instrument pilot in November 2024, aiming to issue a tokenized version of its conventional bond. In July 2025, HM Treasury updated its plans to include onchain settlement, over-the-counter trading and secondary-market development. On February 12, 2026, the government appointed HSBC’s Orion platform to support the pilot, marking a concrete step toward implementation.
The new report adds a timetable and expands the intended role for the financial instrument. Beyond calling for issuance, the report seeks subsequent digital-gilt offerings, live secondary-market trading and eligibility for use as central bank collateral. The report said tokenized securities have limited value unless they can be traded or used to raise cash, and urged the Bank of England to accept digital gilts as collateral.
Key stakeholders and industry support
Ripple, which is listed among the task force’s industry members, backed the initiative on Monday. “Onchain funds, bonds and repo aren’t experiments,” the company said, adding that such instruments are already proving “cheaper, better and faster than their legacy equivalents.” Ripple has been active in tokenization through its RippleNet and XRP Ledger, which support tokenized assets and decentralized finance. The company has partnered with various financial institutions to enable cross-border payments and remittances using digital assets. Its support for the UK tokenization push signals confidence in the regulatory framework and potential for widespread adoption.
Other major players include asset managers like BlackRock and Goldman Sachs, which have been exploring tokenized funds and bonds. BlackRock launched a tokenized money market fund, BUIDL, on the Ethereum blockchain in 2024, which reached several hundred million dollars in assets under management within months. Goldman Sachs has participated in tokenized bond issuances and repo transactions through its digital assets group. JPMorgan has been a pioneer with its Onyx blockchain, handling billions of dollars in repo transactions daily. The involvement of these institutions lends credibility and deep liquidity to the UK’s tokenization efforts.
The UK also has a blockchain-based wholesale payment infrastructure that could support such markets. In December 2023, London-based Fnality launched a sterling-denominated payment system tied to central bank reserves, designed to support real-time repo, tokenized securities settlement and cross-currency payments. Fnality is backed by a consortium of major banks including Santander, BNP Paribas, State Street and UBS. The system provides a bridge between traditional central bank money and blockchain-based transactions, enabling safe and efficient settlement for tokenized assets.
Economic impact and projections
The task force’s estimate of up to $44 billion additional annual output by 2035 represents a significant boost to the UK economy. According to the Office for National Statistics, the UK’s GDP in 2025 was approximately $3.4 trillion, meaning the tokenization sector could contribute roughly 1.3% of GDP growth solely from this initiative. Such a boost could help offset the economic drag from inflation, trade disruptions and slower productivity growth seen in recent years.
Potential sources of this added output include reduced transaction costs, faster settlement cycles, improved liquidity, new asset classes and increased access to capital markets for smaller issuers. For example, tokenized bonds can be issued and settled in minutes rather than days, lowering issuance costs and making bond markets more accessible. The ability to use tokenized securities as collateral in repo markets can unlock liquidity for financial institutions, reducing reliance on central bank facilities. Additionally, tokenization can enable fractional ownership of high-value assets like real estate and art, broadening the investor base.
Furthermore, the development of a vibrant tokenization ecosystem could attract foreign investment and talent, bolstering the UK’s position as a global financial center. London already competes with New York, Singapore and Hong Kong for dominance in fintech and digital assets. A clear regulatory framework and early adoption of tokenized government bonds could give the UK a first-mover advantage, drawing in international issuers and investors seeking to participate in the market.
Regulatory and infrastructure considerations
To achieve these projections, the UK will need to address several regulatory and technical hurdles. The report’s 12-month plan includes testing blockchain-based repo transactions, which require robust legal frameworks for collateralized lending using digital assets. The FCA and the Bank of England will need to ensure that tokenized securities are treated as legally equivalent to traditional securities in terms of ownership, custody and settlement finality. The Digital Securities Sandbox is a critical part of this testing, allowing firms to experiment with tokenized instruments under relaxed rules while regulators observe and refine policies.
Another key aspect is interoperability with existing financial market infrastructure. The UK’s settlement systems currently operate on legacy technology, and integrating blockchain-based settlement requires seamless connectivity. The Bank of England’s Real-Time Gross Settlement (RTGS) system is being upgraded to support tokenized assets, but the timeline for full integration is uncertain. The task force report emphasizes the need for central bank digital currency (CBDC) or tokenized central bank reserves to serve as the settlement asset for tokenized trades, which is why the Fnality system is seen as a step in that direction.
International coordination is also important, as tokenized markets will likely be global. The UK is participating in discussions at the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) to develop consistent standards for tokenized assets. Alignment with the European Union’s DLT Pilot Regime and the Swiss blockchain-based bond market will be essential to avoid fragmentation and promote cross-border liquidity.
The political and public perception of tokenization and cryptocurrency also plays a role. The UK has seen debates around crypto donations to political parties, with some politicians mulling a permanent ban on crypto contributions in the wake of controversies. However, the tokenization push for wholesale markets is largely separate from retail crypto regulation. The government has signaled a desire to be “pro-innovation” while ensuring consumer protection. The task force report is a concrete manifestation of that approach, focusing on institutional-grade tokenization rather than speculative retail trading.
In summary, the UK’s tokenization roadmap appears ambitious but grounded in practical steps. The involvement of major financial institutions, the backing of the government and the existence of enabling infrastructure like Fnality provide a solid foundation. If successful by 2035, the UK could see a $44 billion annual economic boost, solidifying its status as a global hub for digital finance.
Source:Cointelegraph News