The FCA and Bank of England have set out a joint long-term vision for tokenisation and distributed ledger technology in UK financial markets – a move that could eventually have major implications for mortgage funding, property transactions and real-time settlement infrastructure.
The two regulators said tokenisation has the potential to make wholesale financial markets faster, cheaper and more efficient by allowing real-world assets such as securities, bonds and currencies to be digitally represented on distributed ledgers.
While the announcement focuses primarily on wholesale capital markets, the direction of travel is highly relevant for the mortgage and property sectors, where lenders and fintech firms are increasingly exploring digital identity, tokenised assets, smart contracts and faster settlement systems to improve transaction speed and reduce operational friction.
The FCA and Bank said firms had been seeking greater regulatory clarity around tokenised collateral, settlement systems and prudential treatment as adoption of distributed ledger technology accelerates.
FASTER COMPLETIONS
Alongside the tokenisation roadmap, the Bank of England also launched a consultation on extending RTGS and CHAPS settlement hours towards near 24/7 payments infrastructure – a move that could ultimately support faster completions and more flexible funding models across housing and specialist lending markets.
The Prudential Regulation Authority has meanwhile updated guidance around tokenised assets, stablecoins and digital settlement innovation as regulators move from sandbox testing towards broader market implementation.
Industry observers say the reforms could lay important foundations for the next generation of mortgage and property technology infrastructure.
REDUCE DELAYS
The mortgage sector has already seen growing experimentation around AI-powered valuations, digital conveyancing, open property data frameworks and blockchain-enabled transaction models designed to reduce delays and duplicated administration.
The FCA recently also published new guidance aimed at accelerating fund tokenisation within UK financial services.
Simon Walls, executive director of Markets at the FCA, said: “Tokenisation has the potential to transform wholesale markets – reshaping how assets are issued, traded and settled.
“We want to support firms in adopting this technology to lower costs, reduce risk and unlock new services.”
Sarah Breeden (main picture, inset), deputy governor for financial stability at the Bank of England, added: “The task now is for public and private sectors together to build on these strong foundations, moving from pilots to production to support financial stability and sustainable growth.”
