The Bank of England (BoE) has set out plans to accelerate tokenisation and regulated stablecoins in UK financial markets, highlighting efforts to modernise payments, settlement, and collateral management while safeguarding financial stability.

Speaking at the Tokenisation Summit in London on Thursday, Sasha Mills, executive director for financial market infrastructure at the BoE, said 2026 would be “fundamental in shaping the UK’s digital financial future,” with the UK’s central bank focusing on three key areas: systemic stablecoins, tokenised collateral, and the digital securities sandbox (DSS).

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“The UK has the opportunity to build truly holistic digital financial markets,” Mills said, noting that innovation must be underpinned by resilience, proportionate supervision, and international coordination.

Global stablecoin transactions increasing

Mills confirmed the BoE is pressing ahead with a regulatory framework for systemic stablecoins, which will be jointly supervised with the Financial Conduct Authority (FCA). Stablecoins are digital tokens pegged to currencies like the dollar, euro, or pound.

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Mills explained that the proposed framework would allow systemic stablecoins to access a Bank of England deposit account and could include a liquidity facility to act as a backstop for issuers, helping to mitigate potential risks to the UK banking system.

“Our regime proposes to provide systemic stablecoins with a deposit account at the Bank of England while also considering putting in place a liquidity facility to provide a backstop for stablecoin issuers,” she said.

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“Systemic stablecoins need to meet the same standards as existing forms of money used in the UK real economy,” Mills said. The BoE aims to finalise the regime by the end of the year, following a consultation launched in 2025.

A second focus is tokenised collateral, blockchain-based representations of traditional financial assets. In financial markets, these are commonly called “tokenised real-world assets,” a term used to describe the digital representation of real-world or traditional assets on a blockchain.

“Where traditional assets are tokenised and provided the risks of the overall tokenisation arrangement are appropriately mitigated, we don’t expect the types of risks from holding tokenised assets to differ in any material way,” Mills said.

The BoE is clarifying how tokenised collateral can operate under the UK’s version of the European Market Infrastructure Regulation (EMIR), with further policy guidance expected later this year.

BoE’s Digital Securities Sandbox

The DSS allows firms to test issuance, trading, and settlement of securities on distributed ledgers, blockchain-based systems that record and verify transactions in a secure, shared ledger, in a controlled environment. Mills highlighted that the BoE is working to expand the range of settlement assets in the sandbox to include regulated stablecoins.

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“Our DSS framework is adaptable as we progress, allowing us to ‘learn as we go’ from innovators testing different business models within the sandbox,” Mills said.

The sandbox will also host the UK government’s digitally native gilt, DIGIT, enabling exploration of on-chain issuance and settlement of sovereign debt and interoperability with traditional financial market infrastructure.

Mills stressed the importance of global cooperation as digital asset markets evolve, citing engagement with the Financial Stability Board, IOSCO, the Basel Committee, and the Transatlantic Taskforce for Markets of the Future, which aims to strengthen UK-US collaboration on digital finance.

“The future is ambitious,” she said, “but making the changes I outlined today, including finalising the regime for systemic stablecoins; expanding the remit of the DSS to facilitate responsible innovation; and clarifying the use of tokenised collateral under UK EMIR, will support financial stability domestically and internationally.”

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