The Bank of England has launched a consultation on central counterparties (CCPs) accepting tokenised forms of eligible collateral. The Bank said tokenisation could offer opportunities for quicker and more efficient mobilisation and management of collateral, including across jurisdictions, and could contribute to the UK's wholesale digital financial markets strategy and help firms respond more effectively to margin calls.
The consultation forms part of the Bank's broader work with the Financial Conduct Authority, HM Treasury and industry to support the responsible adoption of tokenisation and provide clarity on the future development of UK digital wholesale financial markets.
The Bank said it considers 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. For example, tokenised collateral must remain capable of being valued, transferred and realised when needed, including in stressed conditions.
To support CCPs and their participants in exploring tokenised collateral, the proposed Supervisory Statement is intended to give greater clarity on how the Bank would assess applications involving it. Consistent with the principle of same risk, same regulatory outcome, the Bank said different tokenised collateral 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. It’s part of a major agenda between authorities and industry to enable the responsible adoption of tokenisation in financial markets.”
The Bank welcomes responses from across industry, including CCPs and their market participants, infrastructure providers, technology firms and other stakeholders exploring the use of tokenised collateral in central clearing. The consultation closes on 12 February 2027.
Analysis
Why This Matters
- The consultation would give clearing houses and their participants a clearer route to use tokenised collateral, potentially speeding up how collateral is mobilised and how margin calls are met.
- It signals the Bank's view that existing rules do not block tokenised collateral if the required standards are met, a stance that could shape innovation in UK wholesale digital markets.
- Responses due by 12 February 2027 will inform the final supervisory approach for assessing applications involving tokenised collateral.
Background
Tokenisation converts rights to assets into digital tokens that can be transferred on a shared ledger. Central counterparties stand between buyers and sellers in financial markets, and participants must post collateral to cover exposures. The Bank says the consultation follows broader work with the FCA, HM Treasury and industry on the responsible adoption of tokenisation in UK wholesale financial markets.
What to Watch
- Whether CCPs and market participants begin applying to use tokenised collateral once supervisory clarity is in place.
- The final Supervisory Statement and how it treats arrangements that achieve required outcomes in different ways.
- How tokenised collateral performs in stressed conditions, particularly its ability to be valued, transferred and realised when needed.
Checked
11 claims in this story checked against 1 source: 11 supported.
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- SupportedThe Bank of England is consulting on tokenised collateral in central clearing.News: “The Bank of England has today launched a consultation supporting central counterparties (CCPs) acceptance of tokenised forms of eligible collateral.”
- SupportedThe Bank considers the existing regulatory framework is not a barrier to CCPs accepting tokenised eligible collateral, provided it meets central-clearing standards.News: “The Bank considers 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.”
- SupportedTokenised collateral must remain capable of being valued, transferred and realised when needed, including in stressed conditions.News: “For example, tokenised collateral must remain capable of being valued, transferred and realised when needed, including in stressed conditions.”
- SupportedThe Bank says tokenisation could enable quicker, more efficient mobilisation and management of collateral, including across jurisdictions.News: “Tokenisation could offer opportunities for quicker and more efficient mobilisation and management of collateral, including across jurisdictions.”
- SupportedThe Bank says tokenisation could help firms respond more effectively to margin calls.News: “This could support firms to 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.”
- SupportedThe Bank says tokenisation could contribute to the UK's wholesale digital financial markets strategy.News: “This could support firms to 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.”
- SupportedThe consultation is part of the Bank's broader work with the FCA, HM Treasury and industry to support responsible adoption of tokenisation and provide clarity on UK digital wholesale financial markets.News: “The consultation forms part of the Bank’s broader work with the FCA, HM Treasury and industry to support the responsible adoption of tokenisation and provide greater clarity on the future development of UK digital wholesale financial markets.”
- SupportedThe proposed Supervisory Statement is intended to give greater clarity on how the Bank would assess applications involving tokenised collateral.News: “In order to support CCPs and their participants to explore tokenised collateral, the proposed Supervisory Statement is intended to provide greater clarity on how the Bank would assess applications involving tokenised collateral.”
- SupportedSarah Breeden, Deputy Governor for Financial Stability, said the consultation advances the Bank's secondary objective for innovation in financial market infrastructure while maintaining financial stability.News: “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.”
- SupportedSarah Breeden said the consultation is part of a major agenda between authorities and industry to enable responsible adoption of tokenisation in financial markets.News: “It’s part of a major agenda between authorities and industry to enable the responsible adoption of tokenisation in financial markets.””
- SupportedThe consultation closes on 12 February 2027.News: “The consultation paper closes on 12 February 2027.”
