HMT publishes first Wholesale Digital Markets Champion report

On 13 July 2026, HM Treasury (HMT) published the first report from its Wholesale Markets Champion (the Report).

Background

This Report to the Chancellor of the Exchequer has been developed with the representatives of the financial services sector and is focussed on the future of UK wholesale financial markets. The Report sets out that the aim of this first publication is to provide a framework that works towards how the UK develops a tokenised wholesale financial markets system, and steps towards the sector’s implementation of the Government’s Wholesale Financial Markets Digital Strategy.

Summary

The Report sets out what the Wholesale Digital Markets Champion considers to be the key priorities for achieving the relevant aims:

• Clear direction towards scalable, live tokenised markets that drive industry investment: Build on the Digital Gilt Instrument (DIGIT) pilot to create a broader digital securities ecosystem, supported by further sector issuances and open, interoperable standards to widen investor access. A taskforce will develop and test tokenisation use cases in repo, fixed income and over-the-counter derivatives markets, while assessing how the central securities depositary regulatory framework should evolve. Authorities also plan to create clearer routes from pilots such as the DIGIT and the digital securities sandbox to full market adoption, with a new DIGIT issuance targeted by Q1 2027 and further issuances to support secondary market trading and infrastructure investment.

• Tokenised collateral to support the development of tokenised markets: Expand existing bilateral tokenised asset use cases into wider market solutions. A taskforce will develop and test an end-to-end repo use case using DIGIT and/or private assets. The Bank of England would be prepared to accept DIGIT as collateral in the Sterling Monetary Framework and explore wider acceptance of tokenised collateral, including in central counterparty (CCP) arrangements.

• Establishment of a tokenised funds market: The UK is aiming to develop a tokenised funds market through the Investment Association’s IF3 Lab. Priorities include creating common operational and market practices, demonstrating scalability, and testing practical fund tokenisation use cases. Ongoing engagement with industry and targeted regulatory guidance will help ensure the framework evolves alongside market developments.

• Wholesale payment rails that support tokenised markets: Authorities and industry will expand tokenised payment infrastructure by scaling existing initiatives, developing end-to-end tokenisation use cases, and promoting interoperability through common standards, Application Programming Interface (APIs) and data models. The framework will support settlement using stablecoins, tokenised deposits and central bank money, including through Real-Time Gross Settlement (RTGS) synchronisation mechanisms.

• Legal certainty and best practice to remove obstacles: This workstream would focus on strengthening legal certainty and market confidence in tokenisation. Industry will develop best-practice frameworks, including standardised contractual approaches under English law, identify legal barriers to adoption, address misconceptions about digital assets, and engage with authorities to resolve areas where greater clarity is required.

• Regulatory standards that support tokenised markets: Industry, HMT and regulators will work together to identify regulatory barriers to tokenisation and digital innovation. The objective is to create a supportive framework that enables digital assets and traditional markets to operate effectively together while avoiding unnecessary expansion of the regulatory perimeter and maintaining market integrity.

• Standards supporting domestic and international interoperability: The UK will promote interoperability through common standards for APIs, messaging, reference data and governance. Where harmonised standards are not feasible, technical solutions will connect different platforms and settlement systems. A technology-neutral, principles-based regulatory approach will encourage innovation, competition and cross-border compatibility in tokenised markets.

• Effective financial crime compliance and digital identity: This initiative seeks to modernise financial crime controls for tokenised markets. Priorities include improving the transfer of compliance data, developing interoperable know-your-customer, anti-money laundering and sanctions frameworks, promoting digital identity solutions, and ensuring domestic and international financial crime regulations remain effective and appropriate for distributed ledger technology environments.

• A technology-neutral approach to tax: The objective would be to ensure tax treatment does not depend on the technology used. Industry will provide insights from tokenisation projects and accounting standards to support policy development, while government will seek to embed technology-neutral tax principles within legislation and guidance, reducing uncertainty for market participants and investors.

• Resilience through collaboration between industry and authorities: Industry and regulators will work together to strengthen operational resilience in tokenised markets. Key actions include coordinated testing of cross-network infrastructure and adapting existing resilience principles to address tokenised market risks. The aim is to establish robust standards and practices that support market stability and investor confidence.