The Bank of England published a proposed Supervisory Statement setting out how it would assess applications from central counterparties (CCPs) seeking to accept tokenised collateral. The proposal is aimed at CCPs and their participants, exploring the use of tokenised assets in central clearing.
The Bank links the initiative to tokenisation’s potential to make the mobilisation and management of collateral quicker and more efficient, including across jurisdictions. According to the central bank, this could help firms respond more effectively to margin calls, improve collateral management, and support new developments in central clearing. The work also contributes to the UK’s wholesale digital financial markets strategy.
Existing framework not being considered a barrier
A central element of the consultation is the Bank’s position that the current regulatory framework does not prevent CCPs from accepting tokenised forms of eligible collateral. The condition is that such collateral meets the standards already required in central clearing.
In practice, tokenised collateral must remain capable of being valued, transferred, and realised when needed, including in stressed conditions. The approach therefore focuses on whether tokenised assets can meet these existing standards.
The proposed Supervisory Statement is intended to give CCPs and their participants greater clarity on how such applications would be assessed. It applies the principle of ‘same risk, same regulatory outcome’. Under this principle, the Bank acknowledges that different tokenised collateral arrangements may achieve the required outcomes in different ways, rather than requiring a single model.
Sarah Breeden, Deputy Governor for Financial Stability, said the consultation is part of the Bank’s delivery of its secondary objective for innovation in financial market infrastructure, while maintaining financial stability. The official also described it as part of a broader agenda between authorities and industry to enable the responsible adoption of tokenisation in financial markets.
The consultation paper closes on 12 February 2027. The Bank is seeking responses from across the industry, including CCPs and their market participants, infrastructure providers, technology firms, and other stakeholders exploring tokenised collateral in central clearing.
Part of a wider UK tokenisation agenda
The consultation forms part of the Bank’s broader work with the Financial Conduct Authority (FCA), HM Treasury, and industry to support the responsible adoption of tokenisation. That work is also intended to provide optimised clarity on the future development of UK digital wholesale financial markets.
For CCPs and clearing members, the proposal provides an early indication of the supervisory expectations that would apply to tokenised collateral arrangements. It also confirms that, in the Bank’s view, firms exploring such arrangements can do so within the existing regulatory framework, provided the collateral meets the same standards required of other eligible collateral in central clearing.
