The United Kingdom could add as much as 33 billion British pounds ($44 billion) to its annual economic output by 2035 by becoming a leader in tokenized financial markets, according to a government-backed industry task force. The estimate appears in the first report from Wholesale Digital Markets Champion Chris Woolard, who was appointed by HM Treasury to help implement the government’s digital markets strategy.

Developed with an industry task force comprising more than 50 companies from both traditional finance and crypto, the report sets out a 12-month plan to test blockchain in a financial transaction where securities are used to borrow cash, known as a repo transaction. It also calls for the UK to issue its first tokenized government bond, or digital gilt, by the first quarter of 2027.

The task force includes some of the world’s largest financial institutions such as BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley, HSBC, UBS, and Euroclear, as well as prominent crypto firms like Coinbase, Circle, Ripple, Kraken, and DTCC. This broad coalition indicates the growing mainstream acceptance of blockchain technology in traditional finance.

The road map attempts to move UK tokenization beyond isolated pilots and into live markets where securities can be traded, settled, and used as collateral. The report said the task was now to move “from pilots to scale” and “from ambition to action.” Ripple, which is listed among the task force’s industry members, backed the initiative on Monday. “Onchain funds, bonds and repo aren’t experiments,” the company said, adding that such instruments are already proving “cheaper, better and faster than their legacy equivalents.”

UK builds on digital gilt and settlement initiatives

The digital government bond, or gilt, is not a new proposal. The UK first announced the Digital Gilt Instrument pilot in November 2024. This was followed by a July 2025 update outlining plans for onchain settlement, over-the-counter trading, and secondary-market development. On Feb. 12, 2026, the government appointed HSBC’s Orion platform to support the pilot.

The new report adds a specific timetable and expands the intended role for the financial instrument. Beyond calling for issuance, the report seeks subsequent digital-gilt offerings, live secondary-market trading, and eligibility for use as central bank collateral. The report said tokenized securities have limited value unless they can be traded or used to raise cash, and urged the Bank of England to accept digital gilts as collateral.

The role of tokenization in modern finance

Tokenization refers to the process of issuing digital representations of traditional assets, such as bonds, stocks, or real estate, on a blockchain. This can reduce transaction costs, increase settlement speed, and improve transparency. Proponents argue that tokenized assets can be traded 24/7, allow for fractional ownership, and enable new forms of collateral management. The UK task force’s push builds on similar efforts in other jurisdictions, such as the European Union’s DLT Pilot Regime and Switzerland’s distributed ledger technology initiatives.

For the UK, becoming a global hub for tokenized finance is seen as a way to enhance London’s competitiveness as a financial center post-Brexit. The country already has a robust blockchain infrastructure, including the Fnality payment system launched in December 2023. London-based Fnality created a sterling-denominated payment system tied to central bank reserves, designed to support real-time repo, tokenized securities settlement, and cross-currency payments.

Economic impact and timeline

The economic projection of £33 billion per year by 2035 is based on analysis by the task force, which considered wider adoption of tokenization across various asset classes. This figure assumes that the UK captures a significant share of global tokenized market activity. The report outlines a phased approach: testing repo transactions in 2026, issuing the first digital gilt in early 2027, and scaling up secondary-market trading and collateral use by 2028.

Key milestones include:

• Phase 1 (2026): Live testing of tokenized repo transactions using blockchain, involving a select group of banks and market infrastructures.
• Phase 2 (Q1 2027): Issuance of the first UK digital gilt via HSBC’s Orion platform.
• Phase 3 (2028): Tokenized gilts become eligible as collateral at the Bank of England, enabling broader use in money markets.
• Phase 4 (2030 onward): Full integration of tokenized securities into UK financial markets, including corporate bonds and equities.

Industry reactions and broader context

The initiative has received widespread support from the financial industry. Traditional banks view tokenization as a way to reduce operational risks and unlock new revenue streams, while crypto firms see it as validation of blockchain technology. BlackRock, which has been active in digital asset pilots through its own tokenization fund, said the UK’s clear regulatory framework would attract global capital. Similarly, Coinbase and Circle highlighted the importance of clear rules for stablecoins and digital asset custody.

Notably, the UK is not alone in its tokenization ambitions. The European Central Bank has been experimenting with digital bonds, and the Monetary Authority of Singapore has completed multiple blockchain-based cross-border payment pilots. However, the UK’s comprehensive road map and government backing give it a first-mover advantage in wholesale tokenized markets.

The report also addresses potential risks, including cyber security, operational resilience, and the need for international standards. The task force recommends that the Bank of England and the Financial Conduct Authority continue to collaborate with global regulators to ensure interoperability and avoid fragmentation. On the legislative front, the UK government has already passed the Financial Services and Markets Act 2023, which provides a framework for regulating digital assets, and further secondary legislation is expected later in 2026.

Some critics caution that tokenization could introduce new systemic risks if not properly managed, such as smart contract bugs or concentration of custody services. The task force acknowledges these concerns and urges a phased rollout with rigorous testing. “We must move quickly but carefully,” said Chris Woolard in a statement. “The benefits are enormous, but only if we build on a foundation of trust and safety.”

Looking ahead, the success of the UK’s tokenization push will depend on its ability to attract liquidity, secure cross-border cooperation, and demonstrate tangible efficiency gains. With dozens of firms already committed to the pilot phase, the next 12 months will be crucial in turning ambition into reality.

Source:Cointelegraph News