The United Kingdom stands on the cusp of a financial revolution that could inject as much as 33 billion British pounds ($44 billion) into its annual economic output by 2035, according to a government-backed industry report. The estimate comes from the first publication of the Wholesale Digital Markets Champion Chris Woolard, who was appointed by HM Treasury to spearhead the country's digital markets strategy. The report, developed in collaboration with a task force of more than 50 financial institutions and crypto firms, lays out a detailed 12-month plan to test blockchain technology in a critical financial transaction: using securities to borrow cash. It also sets a bold target for the UK to issue its first tokenized government bond, known as a digital gilt, by the first quarter of 2027.
Understanding Tokenization and Its Economic Potential
Tokenization refers to the process of converting rights to an asset into a digital token on a blockchain. In financial markets, this means representing traditional securities like bonds, stocks, or real estate as digital assets that can be traded, settled, and used as collateral in real time. Proponents argue that tokenization reduces settlement times, cuts costs, increases transparency, and unlocks liquidity for illiquid assets. The UK's push is particularly significant because it aims to move beyond isolated pilot projects and into live, scalable markets where tokenized securities become a mainstream part of the financial infrastructure.
The economic impact estimate of $44 billion per year by 2035 is based on a combination of efficiency gains, new revenue streams from digital asset services, and increased activity in capital markets. The report suggests that early movers in tokenization will capture a disproportionate share of these benefits, and the UK is positioning itself to be that leader. Similar projections have been made by other financial hubs, but the UK's approach is notable for its broad industry backing and clear governmental support.
The Woolard Report and the Industry Task Force
Chris Woolard, a former chief executive of the Financial Conduct Authority (FCA), was appointed as Wholesale Digital Markets Champion in late 2025 with a mandate to accelerate the adoption of digital technologies in wholesale financial markets. His first report, published in July 2026, represents a consensus view from a task force that includes some of the largest names in traditional finance and crypto. Participants include BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley, HSBC, UBS, Coinbase, Circle, Ripple, Kraken, the Depository Trust & Clearing Corporation (DTCC), and Euroclear. This blend of incumbents and innovators is a deliberate strategy to ensure the roadmap addresses real-world market needs and regulatory constraints.
The report identifies three key pillars for action: issuance of tokenized securities, secondary market trading, and use of tokenized assets as collateral. It argues that tokenization remains a niche activity today because most pilots have been isolated and do not connect to the broader financial system. To overcome this, the roadmap outlines a series of concrete steps over the next 12 months. The first step involves a proof-of-concept transaction where a tokenized bond is used as collateral to borrow cash, with settlement occurring on a blockchain. This test will involve multiple task force members and is designed to demonstrate that tokenized securities can be seamlessly integrated into existing repo and collateral management workflows.
The second step is the issuance of a digital gilt by the UK government, which will be a tokenized version of a conventional government bond. The report calls for this to happen by Q1 2027, with subsequent offerings to follow. Critically, the digital gilt must be eligible for use as collateral at the Bank of England's standing facilities. Without this eligibility, the report warns, tokenized securities will have limited practical value because they cannot be used to raise cash in times of need.
Background on the Digital Gilt Initiative
The concept of a digital gilt is not entirely new. The UK government first announced a Digital Gilt Instrument pilot in November 2024, with the aim of exploring how blockchain could improve the issuance and management of government debt. A follow-up update in July 2025 outlined plans for onchain settlement, over-the-counter trading, and secondary-market development. On February 12, 2026, the government appointed HSBC's Orion platform to support the pilot, selecting it from a competitive field of technology providers. The Woolard report now adds a concrete timetable and expands the intended scope. Beyond the initial issuance, the roadmap envisions a series of digital gilt offerings, live secondary-market trading on regulated venues, and acceptance by the central bank as collateral.
The Bank of England has been cautious but increasingly supportive of tokenization. In December 2023, London-based Fnality launched a sterling-denominated payment system tied to central bank reserves, known as the Fnality Payment System. This system is designed to support real-time repo transactions, tokenized securities settlement, and cross-currency payments. It operates on a blockchain and is backed by a consortium of major banks. The existence of this infrastructure is a critical enabler for the tokenization roadmap, as it provides a regulated, real-time settlement layer that can interact with tokenized assets.
The Role of Crypto and Fintech Firms
The task force's inclusion of crypto companies signals a pragmatic approach by the UK government. Ripple, a blockchain payments firm, publicly endorsed the initiative on Monday, stating that onchain funds, bonds, and repurchase agreements are no longer experiments. The company argued that these instruments are already proving cheaper, faster, and more efficient than their legacy counterparts. Similarly, Circle, the issuer of USD Coin (USDC), and Coinbase, the largest US-based cryptocurrency exchange, are participating in the task force, bringing expertise in digital asset custody, stablecoins, and decentralized finance (DeFi). Kraken, another major exchange, is also involved.
This collaboration between traditional finance and crypto is notable because it bridges two worlds that often operate in silos. The task force's work explicitly aims to create an integrated ecosystem where tokenized bonds can be traded on both traditional exchanges and decentralized platforms, and where stablecoins can be used for settlement alongside central bank digital currencies (CBDCs). The UK has been exploring a digital pound (CBDC) but has not yet committed to a launch. The current roadmap does not depend on a CBDC, as existing blockchain-based payment systems like Fnality can provide the necessary settlement infrastructure.
International Context and Competitive Landscape
The UK is not alone in pursuing tokenization. The European Union has implemented the DLT Pilot Regime, which allows for the issuance and trading of tokenized securities under a regulatory sandbox. Singapore has launched Project Guardian, a collaborative initiative with banks and asset managers to explore asset tokenization. Switzerland has a well-established crypto-friendly regulatory environment and has seen several tokenized bond issuances, including a digital bond from the city of Lugano. However, the UK's approach is distinguished by its scale and the breadth of industry participation. The task force includes 50+ organizations representing trillions of dollars in assets under management, which gives the roadmap significant credibility and momentum.
The report also highlights the risk of falling behind. If the UK does not act quickly, it could lose its position as a leading global financial center. Other jurisdictions, particularly in Asia and the Middle East, are moving aggressively to attract tokenization business. The UK's existing strengths in legal framework, market infrastructure, and talent pool provide a strong foundation, but the report warns that complacency could erode these advantages.
Challenges and Next Steps
Despite the optimistic projections, significant challenges remain. Regulatory clarity is needed on how tokenized securities fit within existing securities laws, insolvency regimes, and tax frameworks. The FCA and Bank of England will need to issue guidance or modify rules to accommodate the new asset class. Additionally, interoperability between different blockchain platforms is a key technical hurdle. The task force is expected to propose standards that allow tokenized assets to move seamlessly between different ledgers and settlement systems.
Another challenge is adoption by market participants. While large institutions are involved in the task force, many smaller banks, asset managers, and corporate treasurers are still unfamiliar with blockchain technology. Education and demonstration projects will be essential to build confidence. The 12-month plan includes workshops, pilot transactions, and public consultations to gather feedback and refine the approach.
The political landscape also plays a role. The UK government has been generally supportive of innovation in financial technology, but changes in leadership or priorities could affect the timeline. The report was published under the current government, which has made digitalization of the economy a key plank of its growth strategy. The opposition has also expressed interest in fostering fintech, suggesting a degree of cross-party consensus.
Looking ahead, the next milestones will be the completion of the collateral test transaction by the end of 2026, followed by the issuance of the first digital gilt in early 2027. If successful, the UK could see a rapid expansion of tokenized offerings, including corporate bonds, equities, and real estate. The report estimates that by 2035, tokenized financial assets could represent 10-15% of the total UK securities market, driving the $44 billion annual output boost.
Ripple's statement that onchain funds, bonds, and repos are not experiments but proven improvements underscores the urgency. The technology is ready; what remains is the institutional will to implement it at scale. The UK's tokenization push, backed by a broad coalition of industry leaders and a clear government mandate, may well provide the blueprint for other nations to follow.
Source: Cointelegraph News