UK Government Unveils Tokenized Finance Roadmap: Aiming to Create £33 Billion in Annual Economic Value Added by 2035

Formalizing the digital transformation of its financial hub, the UK has unveiled a tokenized finance roadmap promising to inject up to £33 billion annually into the national economy by 2035. Announced in early July 2026, this strategic shift aims to 'rewire' the City of London by integrating Distributed Ledger Technology (DLT) into the core of wholesale capital markets, government bond issuance, and settlement systems.

Led by HM Treasury and the Financial Conduct Authority (FCA), this roadmap reflects a commitment to maximizing financial system efficiency and securing global competitiveness through asset tokenization. To this end, the government plans to expand regulatory sandboxes and solidify the legal foundation for digital asset issuance.

According to a report by Barclays and PwC, accelerating the adoption of tokenization has the potential to increase UK GDP by up to £33 billion annually by 2035. While a base adoption scenario anticipates growth of £22 billion, the impact expands further in a high adoption scenario involving integration with key partner markets. Tokenization acts as a catalyst for building a low-friction, connected financial system by digitally representing assets and money on shared infrastructure.

Tokenization has the potential to transform the UK economy by digitally representing assets and money on shared infrastructure.

HM Treasury provided £5 million to support the establishment of the Centre for Finance, Innovation and Technology (CFIT), with the City of London Corporation contributing an additional £500,000, bringing the total initial funding to £5.5 million. The center currently operates on a hybrid model and is supported by major financial institutions such as HSBC, Lloyds Banking Group, and Mastercard. This collaborative framework focuses on lowering technical barriers and accelerating innovation across the financial system.

Modernizing the Gilt Market through DIGIT

One of the core elements of this roadmap is 'DIGIT', a digital gilt pilot program. Under new regulations from the UK Financial Conduct Authority (FCA), tokenized forms of eligible assets, including gilts, are being integrated into the UK's wholesale capital markets. The DIGIT pilot aims to digitize the issuance and distribution process of gilts to shorten settlement times and reduce operational costs, and it is expected to become the standard for future public sector debt management.

• Refining the system through the conclusion and result analysis of the DIGIT pilot program
• Conducting future industry consultations on the adoption of wholesale Distributed Ledger Technology (DLT)
• Full-scale implementation and regulatory updates of the Payments Forward Plan
• Goal of achieving a total annual economic impact of £33 billion by 2035

Industry leaders emphasize that payment infrastructure must evolve in parallel with tokenized assets to realize real-time settlement. The Treasury's Payments Forward Plan focuses on building a regulatory framework that supports stablecoins and tokenized deposits, and also includes updates to the Strong Customer Authentication (SCA) framework. This is expected to enable atomic settlement, where the movement of assets and the settlement of money occur simultaneously on the same ledger.

FCA Policy Statement 26/7 addresses progress in fund tokenization, allowing UK authorized funds to invest in tokenized eligible assets such as DIGIT. In particular, Money Market Funds (MMFs) have been opened up to be recognized as eligible collateral for non-cleared trades under the UK European Market Infrastructure Regulation (UK EMIR). These regulatory changes create an environment where institutional investors can participate more safely in the digital asset ecosystem.

Industry Reaction and Global Competitive Landscape

Ripple expressed strong support, stating that the UK's tokenization strategy will accelerate the digitalization of securities and financial assets. This contrasts with the recent case of Robinhood Chain, which, despite being built for tokenized stocks, was actually dominated by memecoin trading. The UK's structured roadmap is distinguished by its aim for substantive financial infrastructure innovation beyond simple speculative trading.

To achieve the economic target of £33 billion, cross-border integration with key partner markets is considered an essential task. Experts analyze that if technical standardization and regulatory harmonization are not achieved, the economic effects of tokenization may be limited to the UK. Therefore, the UK government is focusing on playing a leading role in the international standard-setting process and ensuring interoperability with global markets.

The FCA has established a policy to maintain strict 'red lines' to ensure market integrity. While examining the 'composability' of distributed ledger technology, it plans to strictly apply regulatory principles to manage potential risks that may arise in asset issuance and exchange systems. This reflects the UK's cautious approach of embracing technological innovation without compromising the stability of the financial system.