The tokenisation of securities markets is happening now. The UK Government has expressed its commitment to promoting the adoption of distributed ledger technology (DLT) within UK financial markets, through legislation and other initiatives. The Financial Services and Markets Act 2023 granted His Majesty’s Treasury (HMT) new powers to facilitate digital asset innovation.
In response, HMT launched the Digital Securities Sandbox (DSS), a collaborative initiative between the Bank of England and the Financial Conduct Authority (FCA). The DSS provides a regulated, live environment designed to explore emerging technologies, particularly DLT, in the issuance, trading, and settlement of financial securities in the UK.
This legislation, along with the introduction of the DSS, has laid a strong foundation for the growth of the digital securities market in the UK. The UK Government continues to build on these foundations through its recent announcement to launch a pilot government debt securities programme, “DIGIT”, exclusively within the DSS.
The number of central banks and regulators that are supporting the use of DLT-based currency-related financial services within their local jurisdictions also continues to grow. As of today, 134 countries representing 98% of global GDP—are progressing the transformation of fiat currencies into digital forms, including CBDCs, stablecoins or tokenised deposits. UK already has access to multiple digital currency payments and banking services. This will support realisation of fully tokenised trade and payments settlement, which has long been an identified benefit of DLT-based financial systems.
On review of private sector-led initiatives, access to tokenised securities and currencies continues to grow as institutions and end consumers become more comfortable using mature digitalised financial services. We are seeing rapid increases in banks, fund or investment managers, and other financial institutions growing their digital asset or currency offerings. This has supported delivering customer demands for hyper-customised products whilst simultaneously driving internal efficiencies.
Tokenisation of securities markets is therefore ready for transformation as customers can trade their currently held digital assets or currencies for increased digital assets investor returns and marketplaces can leverage digitalised settlement services for greater efficiencies. The market also continues to promote migration to tokenised assets under management as the benefits of DLT and tokenisation are now well known.
BPX’s mission is to enhance liquidity in investment funds and support the digitalisation of the securities markets. We are therefore delighted to have been accepted into Gate 1 of the Digital Securities Sandbox (DSS) and are proud to be the only FCA-authorised exchange and fund manager to achieve this milestone.
Within the DSS, BPX is working to implement end-to-end workflows that support the entire lifecycle of tokenised financial securities. This includes primary issuance, settlement, custody, ongoing maintenance, secondary trading, and collateralised lending.
To achieve our mission, we aim to support market participants in transitioning from traditional dematerialised processes to a tokenised framework. This evolution offers the potential to reduce operational costs and risks while providing a more streamlined and engaging experience for all stakeholders, ultimately enhancing liquidity.
Whilst BPX is initially focused within the UK, the UAE and other forwarding thinking jurisdictions also continue to show a bright future for global tokenised securities markets. We look to support a new global digitalised economy that realises the value of digital RWAs, currencies within their respective financial markets.
Digital Asset Timeline
Laws and regulations in many advanced economies are changing to accommodate digital assets, paving the way for a New Age of Finance where all Financial Market Infrastructure (FMI) is DLT-based. Recently, the UK has made significant legal and regulatory progress, designed to position it as a global centre for digital assets. Here is a timeline summarising the progress so far.
1 Jan 2025
Gate 2 applications for BoE/FCA DSS open.
18 March 2025
Digital GILT Pilot Request for Information.
8 Jan 2024
The Financial Services and Markets Act 2023 established the Digital Securities Sandbox (DSS) enabling firms and regulators to test the deployment of developing technologies, under the oversight of the BoE and FCA, such as DLT or other technology that facilitates ‘digital assets’ across financial markets.
25 Jan 2024
BoE and HMT response to the consultation paper confirmed they have started the design work on the digital pound.
February 2023
Bank of England (BoE) and His Majesty’s Treasury (HMT) released a consultation paper outlining the case for a digital pound.
June 2023
The UK law commissions report clarified the status of digital assets as personal property.
September 2023
The Electronic Trade Documents Act sets precedent for legal status of electronic documents.
Prospectus Regime Review. The prospectus requirements for offerings on certain types of MTFs are being changed under the proposed draft legislation. Instead of needing a lengthy and costly prospectus approved by the FCA, it is proposed that a “primary MTF operator” (e.g. BPX) can specify a shorter document with its own content and approval process.
Central Bank Digital Currency (CBDC) adoption started. Now, 134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC. Nineteen of the Group of 20 (G20) countries are now in the advanced stages of CBDC development.
Global banks and other financial institutions started to experiment with DLT. Testing evolved into establishing digital asset departments dedicated to applying DLT to several use cases such as stablecoins, repo, and KYC. Many financial institutions are now expanding the application of DLT within their businesses.
The resilience and benefits of distributed ledger technology (DLT) have been demonstrated at scale in cryptocurrency markets, where market capitalisation has reached approximately $2 trillion.
BPX innovations
BPX is disrupting legacy processes by removing barriers and eliminating inefficiencies from traditional capital market workflows and automating processes with the latest proven technologies.
By implementing a new end-to-end digital workflow BPX is enhancing stakeholder user experience, reducing costs and risks and improving liquidity and profitability. BPX is implementing innovations and achieving desirable outcomes.
Innovations
Outcomes
Collateralised lending market for alternative assets.
Inclusive Market Access.
BPX Opinion
“Distributed Ledger Technology (DLT) and tokenisation remain the leading technical innovations our customers believe will drive future growth in financial markets.”
“In the recent past, the application of DLT in wholesale capital markets has been largely experimental; this is quickly changing as legislators and regulators are removing the barriers to digital asset adoption.“
-Ali Celiker Co-CEO
-Abhishek Patel, CTO
BPX is committed to driving the digitalisation of capital markets
Buy-in from industry leaders
BPX convened a working group of leading companies in the digital asset ecosystem that span the capital markets value chain. The inaugural thought leadership event took place on 25 April at Cambridge University, where CEOs and senior representatives from the companies attended.
UK Digital Securities Sandbox
BPX is the only regulated exchange and fund manager to be accepted into Gate 1 of the joint Bank of England / Financial Conduct Authority Digital Securities Sandbox (DSS). The DSS provides a regulated live environment to support innovation in distributed ledger technology (DLT) across securities issuance, trading, and settlement in the UK.
Contributing to policy change
BPX is a member of Global Digital Finance (GDF) and a participant in the Digital Finance APPG, helping to shape UK digital asset policy.
