UK Forms 54-Member Taskforce to Build Live Tokenized Financial Markets

Tokenized Repo Trial Set for Spring 2027

The first operational focus is the repo market, where institutions obtain short-term cash by providing securities as collateral. A live tokenized repo trial is targeted for spring 2027.

Tokenization converts ownership rights in assets such as bonds, investment funds, property or collateral into digital tokens recorded and transferred through distributed-ledger infrastructure. The proposed model is intended to accelerate settlement, reduce reconciliation work and allow collateral to move or be reused with less operational friction.

The program’s central government-debt proposal is known as DIGIT. Woolard’s group recommended an early pilot no later than the first quarter of 2027, placing a government-backed security at the center of the emerging wholesale tokenized market.

Successful issuance would make the UK the first Group of Seven economy to issue government debt using tokenized or distributed-ledger infrastructure. Britain would not be the first jurisdiction globally to conduct a sovereign digital-bond transaction.

John Orchard, chairman of the Digital Monetary Institute at OMFIF, said the government’s readiness to issue debt on distributed-ledger infrastructure separates the UK approach from initiatives in Europe and the United States.

“I would say the most material and interesting distinction from e.g. Europe or US is the commitment of the government to issue its own debt in DLT form (DIGIT), so that there is a high quality ‘safe’ asset to start to build a wholesale capital market around. This is meaningful and useful,” Orchard said.

The proposed sovereign instrument could provide a government-backed benchmark asset around which market participants develop collateral, pricing and settlement systems. The initiative’s stated focus is not simply to digitize existing securities but to make them usable in financing, trading and collateral-management activity.

Hong Kong issued the world’s first tokenized government green bond in 2023 and later priced a record multi-currency digital bond in 2025. Slovenia became the first European Union sovereign to issue debt on a distributed ledger in 2024, while the European Investment Bank has issued blockchain-based bonds since 2021.

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Economic Estimates Depend on Broad Market Adoption

Research associated with Barclays and PwC estimated that tokenization could add as much as £33 billion, or about $44 billion, to annual UK economic output by 2035. Roughly two-thirds of the projected benefit could occur outside financial services through changes in corporate financing, payments, asset administration and capital allocation.

The highest estimate assumes Britain establishes itself as a leading tokenization center while the United States and Europe develop compatible market infrastructure. A more conservative scenario projected £22 billion, or $29 billion, in additional annual output.

The projections also included as much as £14 billion, or about $19 billion, in additional annual tax revenue, depending on adoption, productivity gains and the share of activity captured by the UK.

One account of Woolard’s findings converted the highest output projection to “$44.2 million,” while the surrounding figures identified the equivalent as approximately $44.2 billion. The million-dollar conversion was internally inconsistent and appeared to be a typographical error.

Woolard called tokenized markets a “network game,” referring to the need for issuers, investors, banks, settlement systems and payment providers to operate through compatible infrastructure at sufficient scale.

“Like all network games, it is a race and one where the U.K. needs to move at the speed of the most agile players if we want to ensure we have a stake in developing the approach for international markets,” Woolard said.

“Put simply, tokenised markets are fundamental to the future of financial services. What the UK does here determines our right to be at the heart of the next generation of financial markets,” he added.

Orchard said recognition that tokenization has moved beyond a niche activity was positive and could be critical to London’s survival as a major financial center. The United States and European Union are also examining how tokenized assets can connect with conventional financial systems.

Settlement Infrastructure Remains a Core Challenge

Kirit Bhatia, Chief Digital Assets Officer at Banking Circle, said tokenized markets will require payment systems capable of funding, settling and transferring assets across multiple networks.

“Tokenised markets will need payment infrastructure that can support real-time settlement, cross-border movement, multiple forms of regulated money and interoperability between stablecoins, tokenised deposits and existing fiat rails,” Bhatia said.

“Without that, digital assets risk becoming faster at the edges but still constrained by the legacy plumbing underneath,” he added.

The challenge involves connecting the securities side of a transaction with stablecoins, tokenized commercial-bank deposits, central-bank settlement systems and existing fiat-payment rails. Faster movement of tokenized securities would not remove delays if cash, foreign exchange or collateral remained dependent on slower systems.

The Bank of England is expected to build on its synchronization pilot by connecting the UK’s upgraded real-time gross settlement system with blockchain-based securities used by banks. Orchard compared that work with the European Central Bank’s Pontes initiative, which is expected to roll out in the fourth quarter of 2027.

Orchard said Britain’s timetable trails the European program but serves a similar objective by linking central-bank money with securities held on distributed ledgers. He also said the Federal Reserve would need to proceed carefully because comparable infrastructure could encounter political or legal restrictions tied to the U.S. ban on central bank digital currencies.

Existing UK Projects Provide Early Market Tests

Several domestic transactions provide initial examples for the taskforce. Lloyds, Aberdeen and Archax completed a UK-first tokenized foreign-exchange transaction using tokenized collateral in 2025.

Baillie Gifford and BNY launched Britain’s first fully tokenized investment fund in June 2026. Earlier that year, Digital Asset completed a cross-border intraday repo transaction using tokenized UK government bonds on the Canton Network.

HSBC has issued digital bonds through its Orion platform. BlackRock operates BUIDL, the largest tokenized U.S. Treasury fund identified in the supplied information, with about $2.4 billion in assets. BlackRock also registered as a UK cryptoasset firm in 2025.

Tokenized real-world assets totaled approximately $30 billion during that year after increasing by about 300%, though they remained a small portion of global securities markets.

Boston Consulting Group projections cited two different potential market sizes for 2035. One placed tokenized assets at about $55 trillion, while another estimated that tokenized real-world assets could reach $88 trillion, compared with a combined crypto and stablecoin market of about $3 trillion.

The two forecasts were presented under different formulations and should not be treated as a single estimate. Differences could reflect separate scenarios, definitions or asset categories, though the supplied information did not resolve the reason for the gap.

Separate research found that more than 56% of the tokenization market had no on-chain activity. That measure highlighted the difference between issuing a tokenized asset and creating an instrument with active trading, financing or secondary-market liquidity.

The taskforce will have to address whether tokenized securities can move between platforms, settle against regulated money and function as collateral. Assets confined to proprietary networks could retain many of the operational barriers the initiative is intended to reduce.

Political uncertainty also surrounds implementation. Woolard’s findings were addressed to the UK chancellor, identified as whoever replaces Rachel Reeves, indicating that the recommendations may pass to a successor.