Bank of England and Financial Conduct Authority Establish Roadmap for Wholesale Financial Market Tokenization and Digital Asset Regulation

On May 18, 2026, the Bank of England (BoE) and the Financial Conduct Authority (FCA) officially announced a joint consultation on wholesale market tokenization, aiming to modernize London's financial markets. This initiative was designed to gather industry feedback on the integration of tokenized securities, collateral management, and settlement infrastructure. This signifies a transition to a formal regulatory framework to position the UK as a global leader in digital finance, moving beyond the experimental phase of the existing Digital Securities Sandbox (DSS).

This consultation is a significant milestone for enhancing the efficiency and resilience of the UK wholesale market, and we aim to build an innovative digital asset ecosystem through close cooperation with the industry.

The consultation highlights the close collaboration between the Bank of England and the Financial Conduct Authority, focusing particularly on creating an environment where tokenized assets can be safely traded and settled within the wholesale financial system. The authorities have requested specific feedback on technical standards and operating rules for not only tokenized securities but also the settlement infrastructure that supports them. Industry stakeholders can submit their views on the proposals by July 3, 2026.

Strengthening the Regulatory Foundation through the Digital Securities Sandbox (DSS)

The launch of the joint consultation is based on the achievements of the Digital Securities Sandbox (DSS), which has been jointly operated by the Bank of England and the Financial Conduct Authority. The DSS has served as a foundation for ensuring regulatory clarity by supporting firms to experiment with distributed ledger technology (DLT) and tokenization in a controlled environment. The data and experience accumulated through these experimental stages are being used as key evidence for the establishment of this formal policy.

• Q1 2026: Launch of stablecoin regulatory sandbox and selection of 4 innovative companies including Revolut
• H1 2026: Finalization of fund tokenization rules (PS26/7) and introduction of Direct2Fund regulations
• May 18, 2026: Publication of joint consultation paper on wholesale market tokenization and commencement of industry feedback collection
• July 3, 2026: Deadline for submission of industry feedback on the consultation paper

UK financial authorities have designated 2026 as the inaugural year for establishing digital finance regulations and are simultaneously conducting various projects. In particular, the PS26/7 policy statement related to fund tokenization is expected to contribute to expanding the eligibility of Money Market Funds (MMFs) and increasing the efficiency of collateral management. This series of measures is part of a systematic roadmap to increase the acceptance of digital assets across the UK financial market.

In terms of infrastructure, the operation of the Bank of England's 'Synchronisation Lab' is drawing attention. This lab is responsible for technical verification to ensure that the Real-Time Gross Settlement (RTGS) system can interoperate with distributed ledger technology. This is an essential process for the modernization of wholesale payment systems, supporting the seamless integration of tokenized assets without being disconnected from existing financial systems.

Regulatory Priorities for Market Resilience and Financial Crime Prevention

The Financial Conduct Authority has selected resilience, market efficiency, technological innovation, financial crime prevention, and conflict of interest management as the five major priorities for wholesale market regulation in 2026. This reflects a commitment to maintaining strict standards to avoid compromising market stability while encouraging innovation. In particular, it is strengthening supervisory frameworks to identify and preemptively block new types of risks that may arise during the DLT adoption process.

In the field of stablecoins, full-scale testing began in early 2026. The stablecoin sandbox, for which four companies including Revolut were selected, is focusing on examining payment and wholesale settlement use cases. The results derived from this sandbox are expected to serve as key indicators for the UK's final stablecoin regulatory proposal to be announced at the end of 2026.

In conclusion, the publication of the consultation paper on May 18, 2026, demonstrates that the UK is accelerating the integration of the digital asset market into the institutional framework. The results of the industry feedback collection, which closes on July 3, will be a crucial variable in determining the UK's future financial competitiveness. The Bank of England and the Financial Conduct Authority plan to finalize the rules for wholesale market tokenization by the end of 2026 based on the insights gained through this consultation.