The UK government is advancing its digital asset and tokenisation agenda, with Economic Secretary to the Treasury Tulip Siddiq and the Financial Conduct Authority (FCA) outlining key initiatives and a regulatory roadmap. These developments aim to position the UK as a leader in financial innovation, addressing both market opportunities and industry concerns.
Siddiq, speaking at the City & Financial Tokenisation Summit on 21 November, highlighted the government’s commitment to leveraging emerging technologies. Central to this strategy is the Digital Securities Sandbox, launched in September, which allows experimentation with distributed ledger technology (DLT) in capital markets.
The sandbox enables securities to be created, traded, and settled on blockchain platforms by providing temporary adjustments to regulatory frameworks. Chancellor Rachel Reeves further demonstrated government support by announcing plans to issue a Digital Gilt Instrument (DIGIT) through the sandbox, testing DLT’s potential in government debt issuance.
Stablecoin rules
In terms of crypto regulation, the UK government is proceeding with plans outlined in its October 2023 consultation. These proposals aim to extend traditional financial regulations to cryptoassets, while also introducing regimes for public offerings and market abuse. A notable shift has been made regarding stablecoin regulation: instead of a phased approach, stablecoin rules will now be implemented alongside broader cryptoasset regulation. Siddiq explained that this reflects evolving market conditions, with the government prioritising wholesale market opportunities while ensuring space for innovation.
The speech also addressed industry feedback, particularly around staking services. While not explicitly confirmed, Siddiq hinted that staking may not always be classified as collective investment schemes, suggesting a more flexible regulatory stance.
Timeline
The FCA has provided a timeline for implementing these changes, with key consultations expected in 2024 and 2025, followed by final rules in 2026. This roadmap aligns with the FCA’s broader strategy, which includes developing international standards through its role in the International Organisation of Securities Commissions.
