This week, the UK government published its strategy for wholesale financial markets and its digital asset strategy.
HM Treasury outlined a path to remove barriers and acknowledged the need to update regulations. The goal is to seek greater efficiency, lower costs, improved liquidity/resilience, better support for the real economy, and competitiveness vs. other jurisdictions.
The first of two reports has been delivered to the Chancellor of the Exchequer and offers a framework for supporting the implementation of the Wholesale Financial Markets Digital Strategy.
The UK has already launched the DIGIT Pilot [Digital Gilt Instrument], which aims to make the UK the first G7 country to issue digital Government debt securities.
The Digital Securities Sandbox (DSS) has been created so that firms can now apply to explore the use of digital assets.
The report is based on pursuing three foundational missions: Market optimization (no more paper plus automation); Fundamental market transformation, including tokenization and stablecoins; and market leadership to position the UK as a globally defining jurisdiction.
Appointed in April 2026, Chris Woolard CBE, a partner at EY and formerly the competition champion at the FCA, is HM Treasury’s Wholesale Digital Markets Champion, holding the mission of accelerating the adoption of tokenization across UK financial markets.
As outlined in the Wholesale Digital Markets Champion – Terms of Reference, the objectives are:
- Provide market leadership and support industry progress in developing a tokenized wholesale financial markets ecosystem.
- Provide leadership to co-ordinate the sector’s wider implementation of digital as outlined in the Wholesale Financial Markets Digital Strategy
A report on blockchain (DLT) adoption and interoperability is expected to be published by July 2027.
A statement issued by the City of London claims that “tokenization could add hundreds of billions of pounds of economic value to the UK economy by 2035.”
Additionally, it is anticipated that up to £33 billion could be added to the UK’s annual economic output while generating over £14 billion in annual tax revenues by 2035.
“As one of the world’s largest and most international financial services markets, the UK is uniquely placed to become the global leader in wholesale market tokenization. There is so much potential, technologically and economically, if the right actions are taken and decisions are made now to embrace and support tokenization,” says Woolard.
Policy Chairman of the City of London Corporation, Chris Hayward, believes the UK has a once-in-a-generation opportunity to lead this digital transformation he describes as a “digital big bang.”
Dozens of TradFi and digital asset firms have signed up to support this transformation
Richard Baker, CEO and founder of Tokenovate, says the first report is a strong step forward in the UK’s ambition to move to digital assets, with a focus on market activity and not just isolated pilots.
“Starting with an end-to-end repo transaction is the right approach. It will test whether tokenized assets can be traded, used as collateral and settled efficiently across digital and existing infrastructure. DIGIT should be judged in the same way. Its success will depend on what comes after issuance, including its ability to support secondary trading, repo and collateral use, and attract institutional liquidity,”says Baker.
He cautioned about the possibility of creating “digital silos.”
“The UK has strong legal foundations, but the report is right to call for myth-busting around English law and clear frameworks on settlement finality, collateral treatment and custody. The priority now is turning that legal strength into practical market adoption, giving firms certainty alongside a clear route from testing to production.”
Other hurdles and challenges will emerge along the way.
The forthcoming second report is said to focus on implementation details, and industry feedback is expected by September 2026.
The UK is already working with the US to coordinate regulatory activity, which will give both countries a boost – if the US can get the CLARITY Act passed into law. Stablecoin legislation in the US is already in place. Other jurisdictions have updated regulations to support digital asset innovation, but the importance is greater for the UK and the US – the two leading financial centers in the world. Pursuing wholesale markets is where the greatest benefit will be earned, and it will also help guide the retail sector. Woolard has a solid reputation from his days at the FCA, and it appears he is placing needed urgency and effort to support the benefits of digital assets.