UK Finance Leaders Expect Tokenization to Reshape Financial Services

Seventy-one percent of surveyed UK finance leaders expect tokenization to reshape financial services, as the United Kingdom works to integrate digital assets into its financial infrastructure and explore cross-border uses with the United States.

The annual survey covered 100 senior decision-makers at major UK banks, insurers, asset managers and financial sponsors. Faster payments and settlement ranked as the most frequently identified potential benefit, cited by 60% of respondents. Improved collateral and liquidity management was cited by 41%.

Moving assets and payments onto digital infrastructure could free capital and liquidity tied up in transactions for other uses. Lloyds Banking Group partnered with Archax and Canton Network in a transaction it called a UK first: a tokenized deposit funded the purchase of a tokenized UK government bond on a public blockchain.

The Bank of England, the UK's central bank, proposed in May extending core settlement infrastructure toward near-24-hour availability. A subsequent government payments blueprint called for tokenized and traditional money to operate within an interoperable payments system, allowing different forms of money to work across connected payment networks.

In July, a government-backed industry task force estimated that leadership in tokenized finance could add as much as $44 billion to annual UK economic output by 2035. It also called for the country to issue its first tokenized government bond by early 2027.

The UK and US treasuries recommended forming a private-sector group to test cross-border uses of tokenized assets. They also asked US financial regulators and the Bank of England to work toward a common regulatory approach.