The UK government has released a new digital transformation strategy for wholesale financial markets, which includes the extensive implementation of distributed ledger technology (DLT), asset tokenization, and modern digital payment solutions.
This is reported by Business • Media
Innovations for the Financial Sector
The document places key emphasis on creating experimental environments, including the Digital Securities Sandbox, where the use of stablecoins as a payment instrument will be tested. Authorities are also open to innovations in the payment sector, including tokenized deposits and new solutions based on stablecoins.
“The government and regulators are open to innovations in existing forms of payment, such as tokenized deposits, as well as new solutions like stablecoins,” the Treasury document states.
The government plans to utilize blockchain, artificial intelligence, and quantum computing to significantly update the processes of issuance, trading, clearing, settlement, and reporting. DLT will enable the transfer of financial assets in the form of tokens on shared ledgers, enhancing transparency and data synchronization. Tokenization has the potential to reduce costs, ensure real-time information exchange, and create new models of asset ownership.
Testing and Developing Digital Solutions
Particular attention is given to the rapid growth of the tokenized real assets (RWA) market: by 2025, it is expected to reach $24 billion, which is a 380% increase compared to three years ago. In this context, stablecoins and tokenized deposits are viewed as important tools for digital settlements that can coexist with traditional payment systems. Their testing will take place in the Digital Securities Sandbox—a specialized environment for creating temporary regulatory regimes that will accelerate the adoption of innovations.
Among other initiatives in the strategy are the elimination of paper documents in financial markets (including share certificates), automation of daily routine processes, and the implementation of Smart Data principles for effective management of relevant, verified, and structured data.
The UK also intends to adapt English and Welsh law to work with tokenized assets, recognizing it as sufficiently flexible to support innovation.
Additionally, the government announced the first issuance of digital bonds (DIGIT) based on DLT to test settlement processes, infrastructure compatibility, and the development of the secondary market.
To coordinate all digital reforms, an independent expert—Digital Markets Champion—will be appointed to unite the efforts of the state, private sector, regulators, and international participants to promote the digitization of financial markets.
“Collective actions by the government, regulators, and the sector will be key to implementing the new digital market structure,” the strategy notes.
It is worth noting that starting in 2026, cryptocurrency companies in the UK will be required to report on their users’ activities in accordance with new regulations.