The Bank of England has launched a consultation on a proposed Supervisory Statement on central counterparties (CCPs) accepting tokenised forms of eligible collateral. To support CCPs and their participants exploring tokenised collateral, the statement is intended to provide greater clarity on how the Bank would assess applications involving it.
The Bank said the existing regulatory framework is not a barrier for CCPs accepting tokenised forms of eligible collateral, provided the collateral meets the standards required in central clearing. Reuters reported that the consultation covers the requirements CCPs need to meet to accept tokenised collateral, which could make it easier to meet margin calls.
WHAT THE BANK PROPOSES
According to the Bank, tokenisation could offer quicker and more efficient mobilisation and management of collateral, including across jurisdictions. That could help firms respond more effectively to margin calls, improve collateral management and support innovation in central clearing, contributing to the UK's wholesale digital financial markets strategy.
Tokenised collateral must remain capable of being valued, transferred and realised when needed, including in stressed conditions. Under the principle of same risk, same regulatory outcome, the Bank said different tokenised arrangements may achieve those outcomes in different ways.
Sarah Breeden, Deputy Governor for Financial Stability, said: “Through today’s consultation, the Bank is further delivering its secondary objective for innovation in financial market infrastructure, while maintaining financial stability.” She added that the consultation is “part of a major agenda between authorities and industry to enable the responsible adoption of tokenisation in financial markets.”
BUILDING ON EARLIER COMMITMENTS
The consultation follows a paper in which the Bank of England and the Financial Conduct Authority (FCA) published a shared vision for tokenisation in UK wholesale financial markets. Alongside it, a Prudential Regulation Authority (PRA) Dear CEO letter confirmed that tokenised traditional assets should generally receive the same prudential treatment as their non-tokenised equivalents, provided the legal rights are identical and the risks comparable.
The Bank also set out its thinking on collateral at the time. For CCPs, its policy preference was to let tokenised versions of assets already acceptable as regulatory collateral qualify under UK EMIR, provided the risks of the arrangements are appropriately mitigated, and it said it would set out its policy considerations in the third or fourth quarter. The Bank said it would consider tokenised assets, including the planned DIGIT digital gilt, as collateral for central bank purposes, and said it would upgrade its securities and collateral management system in 2027 to enable direct connectivity to digital asset ledgers.
WHO THE BANK WANTS TO HEAR FROM
The consultation paper closes on 12 February 2027. The Bank welcomes responses from across industry, including CCPs and their market participants, infrastructure providers, technology firms and other stakeholders exploring tokenised collateral in central clearing.
The Bank said the consultation forms part of its broader work with the FCA, HM Treasury and industry to support the responsible adoption of tokenisation and give greater clarity on the future development of UK digital wholesale financial markets.
THE TGB VIEW
The TGB UK market profile shows the balance sheet of UK-resident banks and building societies at £10.7tn in July 2026, about 3.6 times GDP, reflecting London's role as an international wholesale banking centre, with 54% of liabilities in foreign currency. For a system of that size and international reach, the relevant gain is faster mobilisation of collateral across jurisdictions, which the Bank says tokenisation could offer. By saying current rules are no barrier for collateral that meets clearing standards, the Bank leaves it to CCPs to bring forward applications, which its proposed Supervisory Statement would guide. The next date is 12 February 2027, when the consultation closes.
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