The Bank of England has launched a formal consultation on how central counterparties (CCPs) can accept tokenized collateral within the existing regulatory framework. The central bank said current rules do not prevent such arrangements, but it is proposing a Supervisory Statement to clarify how applications involving tokenized collateral will be assessed while maintaining existing risk management and financial stability standards.
The proposed approach follows the principle of same risk, same regulatory outcome, meaning different tokenized collateral arrangements could meet required standards through different methods. The Bank said tokenization could help firms mobilize and manage collateral more quickly and efficiently, including across jurisdictions, and could help clearing members respond more effectively to margin calls. Sarah Breeden, Deputy Governor for Financial Stability, said the initiative supports the Bank's secondary objective of encouraging innovation in financial market infrastructure without weakening financial stability.
The consultation is part of the UK's broader digital wholesale financial markets strategy and involves coordination with the Financial Conduct Authority, HM Treasury and industry participants. Responses are due by 12 February 2027. The Bank is seeking feedback from CCPs, clearing members, market participants, infrastructure providers, technology firms and other stakeholders.
Market infrastructure providers are already expanding tokenization services. DTCC has introduced a digital collateral management platform on its DTCC AppChain, powered by the LF Decentralized Trust Besu blockchain, and its subsidiary DTC launched the DTCC Tokenization Service on 28 October, with twenty DTC participants signed up. The service connects to the Canton Network and DTCC's private Besu network. In the United States, CFTC Chair Michael Selig has called for regulators to prepare markets for mass tokenization, while the CFTC expanded eligible collateral rules in February to include certain payment stablecoins issued by national trust banks. In July 2026, JP Morgan used tokenized securities to settle a margin requirement, and the European Central Bank began accepting marketable tokenized assets as eligible Eurosystem collateral.
