Bank of England and FCA set out route to live tokenised markets

Tokenisation means representing an asset, and the record of who owns it, digitally using distributed ledger technology. The Bank of England and the Financial Conduct Authority (FCA) want it to work for wholesale instruments: shares, government and corporate bonds, money-market instruments and fund units. On 14 September 2026 the two authorities published a joint feedback statement, FS26/1, responding to the 123 submissions they received after a call for input issued on 18 May 2026. Read together with earlier central bank speeches and a Prudential Regulation Authority (PRA) letter, the document sets out where UK policy on tokenised markets is heading next.

The shift matters for banks, central securities depositories, asset managers, market infrastructure providers and the fintechs building settlement and custody systems in this space. The message from the authorities is that pilot projects are no longer the end point: firms are expected to move towards live, commercially viable use, supported by a regulated sandbox, a promised roadmap and a central-bank-money settlement service targeted for 2028. At the same time, several of the rules firms need before committing capital at scale are still not finalised.

It is worth being precise about what has actually been announced. The Bank and the FCA have not published a single document numbering five formal commitments. The themes commonly discussed under that heading — proportionate regulation, live testing, clearer processes, market coordination and cross-border standards — are drawn from the May 2026 shared vision, the September feedback statement, and related speeches and letters from the Bank, the FCA, the PRA and HM Treasury. Treat what follows as a synthesis of an official programme spread across several bodies, not a single numbered Bank of England announcement.

Proportionate rules, not a carve-out

The authorities have kept to a principle they call technology neutrality: a regulated activity carried out on a distributed ledger should produce the same regulatory outcome as the same activity carried out conventionally. Regulation is intended to be technology-neutral and proportionate, but requirements may still reflect the particular risks that distributed-ledger technology introduces, and a tokenised trade still needs an identifiable, accountable regulated person responsible for compliance. Applicable resilience, market-integrity and financial-crime requirements continue to apply, subject to the DSS's proportionate staged framework. Proportionate does not mean exempt.

From pilot to live securities: the Digital Securities Sandbox

The main vehicle for live activity is the Digital Securities Sandbox (DSS), a jointly operated Bank and FCA environment created under the Financial Services and Markets Act 2023 (Digital Securities Sandbox) Regulations 2023, which came into force on 8 January 2024. The DSS works through staged gates, and activity after Gate 2 involves real securities rather than simulations.

The FCA said in May 2026 that it was working with 16 firms through the DSS; the dashboard update of 21 September 2026 lists 16 Gate 1 approval notices plus two Gate 2 entries, but HSBC and ClearToken appear in both groups, so this still represents 16 distinct firms. The public dashboard records approvals, not transaction volumes, so it does not show how much live issuance or settlement has actually taken place at Gate 2.

The gap at the end of the sandbox

The DSS is scheduled to run until 8 January 2029, five years after it began, though HM Treasury can extend it through legislation. The authorities maintain that the sandbox already permits scalable live activity. Respondents to the call for input made a different point: uncertainty about what happens after the DSS ends is discouraging the investment needed to scale. Both things can be true at once. A firm can issue and settle real securities within sandbox limits today while still hesitating to build permanent infrastructure around a regime that has not been confirmed.

The Bank and FCA, working with HM Treasury, are considering whether to extend or modify the DSS, or instead amend the wider central securities depositories regulatory framework, to create a lasting settlement regime. No decision had been published by 3 October 2026. Respondents also flagged an unresolved legal question: whether settlement on a distributed ledger gives the same protection against a counterparty's insolvency as the UK's Settlement Finality Regulations provide for conventional systems. That question remains open.

The authorities said in September that they intend to publish a joint roadmap, with target dates, workstream detail and dependencies, later in 2026. No such roadmap had been located as a published document as of 3 October 2026.

Settling in central bank money: the 2028 synchronisation service

Separately from the sandbox, the Bank has committed to targeting live delivery, in 2028, of a synchronisation service. The idea is to make a movement of an asset — including a tokenised asset held on a distributed ledger — conditional on a corresponding movement of sterling central-bank money in a Real-Time Gross Settlement (RTGS) account, so that the two happen together or not at all. Deputy Governor Sarah Breeden described the plan in a speech on 19 May 2026, saying the Bank's Synchronisation Lab had gone live earlier that month with 18 participating firms, testing use cases covering tokenised securities, foreign exchange and house purchases.

The Bank intends to upgrade its internal systems in 2027 so it can connect directly to tokenised-asset ledgers, ahead of the 2028 target. That work sits alongside a separate plan to extend RTGS operating hours, from 12 to 16.5 hours a working day in 2027, with the Bank consulting on eventually running up to 22 hours a day and potentially 23.5 hours a day, seven days a week. No exact launch date within 2028, service scope, operator model, access criteria or pricing for the synchronisation service had been set out as of 3 October 2026.

Collateral, custody and settlement assets

The PRA set out its prudential position in a letter published on 18 May 2026: a tokenised version of a traditional asset should generally receive the same prudential treatment as its non-tokenised equivalent, where the legal rights are identical and the underlying risks are comparable. Firms must keep applying the existing prudential framework while the PRA develops further clarification. Respondents pointed out a tension here: international Basel standards on cryptoasset exposures could push firms toward more cautious capital treatment of tokenised instruments than this equivalence principle implies, and what counts as "comparable" risk has not been defined in detail.

The Bank intends to consult on central counterparties' acceptance of tokenised collateral, and is considering whether tokenised assets, including the Digital Gilt Instrument, could become eligible collateral in the Sterling Monetary Framework. The September feedback statement also confirmed that stablecoins could be used as settlement assets within the DSS, but only subject to conditions and to HM Treasury amending the DSS regulations — this is not a general permission, and readers should not take it as confirmation that any particular stablecoin is already regulated or eligible for that use.

Who is coordinating the market

Responsibility is split. The Bank and FCA run the DSS and the wider regulatory programme. HM Treasury published its Wholesale Financial Markets Digital Strategy on 15 July 2025 and appointed a Wholesale Digital Markets Champion, whose first report, published on 13 July 2026, proposed industry action groups to work on issues such as interoperability and collateral. The promised roadmap is meant to explain how the Bank and FCA's work connects with that Treasury-led and industry-led activity, rather than treating tokenisation policy as a single body's project.

Cross-border standards: what's set by regulators, what's left to industry

The authorities have said they expect detailed technical standards, such as ledger protocols and token formats, to be developed by industry rather than mandated by regulators. Their own role is regulatory coordination and international engagement, through bodies including the International Organization of Securities Commissions (IOSCO), the Committee on Payments and Market Infrastructures (CPMI), Project Guardian and the UK-US Transatlantic Taskforce on Markets of the Future. This is a commitment to pursue international alignment on rules and legal treatment, not a plan to require a single blockchain or token standard.

The risks tokenisation doesn't remove

None of this changes the basic fact that tokenised instruments can still lose value, and that settlement and custody arrangements built on new technology carry operational risk. The authorities have identified smart-contract vulnerabilities, bridge and key-management failures, cyber risk, governance weaknesses, oracle risk and cross-chain messaging failures as areas firms must manage and account for. They have also been explicit that DSS entrants are regulated but do not initially have to meet the same resilience standards as a fully authorised financial market infrastructure. This article describes a regulatory and policy programme; it is not financial, investment or legal advice, and nothing in it should be read as a recommendation to use any tokenised product or service.

What to watch next

The clearest gap is the roadmap itself: without it, firms still don't have confirmed dates for the permanent post-DSS regime, finalised collateral eligibility rules, or detail on how the 2028 synchronisation service will actually operate. Readers wanting the primary detail, rather than commentary on it, should go to the Bank of England's and FCA's own publications, including the FS26/1 feedback statement, the DSS dashboard, and any roadmap or consultation documents the authorities issue over the rest of 2026 and into 2027.