Advocacy group UK Finance, in collaboration with consulting firm Oliver Wyman, has released a report urging the British government to prioritize securities tokenization to ensure the United Kingdom’s prominent position in the global financial landscape. The report emphasizes that tokenization offers significant advantages such as lower costs, reduced risk, and increased accessibility, which are crucial for transforming the financial system.
The chair of UK Finance, Bob Wigley, warned that the UK is at risk of falling behind other financial centers that have already embraced digital bond issuance, citing Singapore and Switzerland as examples. To prevent this decline, the report calls for proactive measures from the government, stressing the need for action from the industry.
Highlighting Singapore’s Project Guardian as a model for collaboration between governments and the private sector, the report encourages the UK government to explore similar partnerships to foster the growth of tokenized assets within the country.
According to the report, the UK already possesses a strong legal foundation for securities tokenization, albeit requiring some adaptations. To position itself as a global leader in tokenization, UK Finance proposes a comprehensive roadmap with three key components: innovation, interoperability, and global standards leadership. The plan sets a five-year horizon and underlines the significance of financial market infrastructure sandboxes, scheduled for launch by the Treasury later this year.
Despite its potential, tokenization currently remains limited, with only 1% of the $20.6 trillion worth of global long-term fixed income instruments being tokenized in 2021, as per the report’s research. Therefore, the report serves as a call to action, urging the UK government and industry stakeholders to prioritize and accelerate the adoption of tokenization to secure the country’s financial future.
In conclusion, the report urges the UK to embrace the transformative power of securities tokenization, emphasizing that its advantages extend beyond being a mere luxury. To remain a global financial leader and avoid falling behind other jurisdictions, the UK must seize the opportunity to establish itself at the center of this financial transformation.