Gaining speed on tokenization is vital for the UK’s financial future, warns a banking group

UK Finance says it’s not too late for the UK to catch up with other jurisdictions’ quicker start to tokenizing securities, and it better do so if it wants to remain a global financial leader.

Advocacy group UK Finance is urging the British government to encourage the tokenization of securities. The market is small now, but the stakes are high going forward.

UK Finance Chairman and former Bank of England Board Member Bob Wigley wrote in a Financial Times editorial at the time of the report’s publication:

   “The UK is in danger of falling behind other financial centres, as digital bond issuance to date in other places such as Singapore or Switzerland [...] Our progress is similar to that of the US, which can quickly be overcome due to its huge financial resources. , deep capital market and technological knowledge”.

“The UK government has given some indications of its commitment to tokenization and its enablers. The industry now requires government action,” the report added. He presented the Singapore Guardian Project as an example of a government exploring collaboration with the private sector to develop the use of tokenized assets.

The UK already has a growing “fit-for-purpose” legal basis for security tokenization, should it need adaptation, according to the report. UK Finance has suggested a roadmap for the UK to position itself as a leader in the global tokenization market.

The detailed plan had three components: innovation, interoperability, and leadership in global standards, with a five-year horizon. Financial market infrastructure sandboxes, scheduled to be launched this year by the Treasury, played a key role in the plan.

Currently, tokenization is only happening on a small scale, with 1% of $20.6 trillion in long-term global fixed income instruments tokenized in 2021, according to research cited in the report.