In the UK, a strategy for transforming wholesale financial markets with the implementation of DLT has been developed and presented.
At the same time, the country will establish a sandbox for testing stablecoins as a means of payment.
Authorities also reported on the issuance of DIGIT and the positive perception of tokenized deposits.
The UK government has presented a comprehensive strategy for the digital transformation of wholesale financial markets, which includes the widespread adoption of distributed ledger technology (DLT), asset tokenization, and innovations in digital payments.
As part of this initiative, key attention is given to experimental environments, particularly the Digital Securities Sandbox, where the use of stablecoins as a payment instrument will be tested.
‘The government and regulators are open to innovations in existing forms of payments, such as tokenized deposits, as well as new solutions like stablecoins,’ the document from the Treasury states.
According to the published document, the government aims to utilize technologies such as blockchain, artificial intelligence, and quantum computing for a deep modernization of processes in issuance, trading, clearing, settlement, and reporting in financial markets.
DLT allows financial assets to be represented as tokens on shared ledgers, ensuring better synchronization and transparency of data. Tokenization can provide cost reduction, real-time data exchange, and new models of asset ownership.
Separately, the government noted the rapid growth of tokenization of real assets (#RWA ), the market volume of which is projected to reach $24 billion by 2025, increasing by 380% over three years (according to RedStone, Gauntlet, and RWA.xyz).
In this context, stablecoins and tokenized deposits are viewed as key instruments for digital settlements, which can operate alongside traditional payment systems. Their testing will take place in the Digital Securities Sandbox, allowing for the creation of temporary regulatory regimes and their rapid integration into the permanent regulatory framework.
The government has also announced its intentions:
eliminate paper documents in financial markets (primarily, share certificates);
automate routine processes that currently require daily human intervention;
ensure effective data management by implementing Smart Data principles — relevant, structured, verified, and interoperable data.
Moreover, the UK plans to adapt English and Welsh law to work with tokenized assets, recognizing it as sufficiently flexible to support innovation.
The government also announced the first issuance of digital bonds (DIGIT) based on DLT — aimed at testing settlements, infrastructure compatibility, and developing the secondary market.
To coordinate all initiatives, the government will appoint a Digital Markets Champion — an independent expert who will bring together the private sector, regulators, and international jurisdictions in 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 states.