Today UK Finance, the banking and financial services industry body, called for government action to support the UK in adopting tokenized securities. The UK currently lags behind other countries with regards to tokenization. Along with Oliver Wyman, he published a report outlining a path for the UK to become a leader.

“Security tokenization is likely to transform financial markets by delivering lower costs, lower risks and broader market access,” said Bob Wigley, UK Finance Chairman. “But without continued bold action, the UK risks falling behind other jurisdictions.”

The industry body called on the government to issue bonds using blockchain, following the Hong Kong Monetary Authority and the European Investment Bank (EIB), which has issued four digital bonds.

Additionally, there is a request for the Treasury to explore whether there is an “industry appetite for a shared national infrastructure for tokenized securities.”

While the EU DLT Pilot Scheme is already active, the UK IMF Sandbox is not yet out of the exit gates. UK Finance asked Her Majesty’s Treasury (HMT) to urgently implement the sandbox as the number one priority. You are interested in a roadmap of what happens when the sandbox ends, as there is a risk that efforts will go to waste. He also wants to see connectivity between other jurisdictions and the UK Sandbox.

UK Finance has called for flexibility regarding the Central Securities Depository Regulation (CSDR). The EU DLT Pilot Scheme relaxes legislation allowing a single entity to operate both a trading platform and a central securities depository (CSD). This is because a distributed ledger often covers most of the functions of a CSD in property registration and asset liquidation.

However, despite the fact that the EU implemented its Pilot Scheme, three months after the legislation came into force, there has been little activity. One of the challenges is limits on transaction volumes for digital securities, which resulted in the largest players choosing to comply with existing legislation.

“The opportunities presented by tokenization are substantial and with the UK being a leading global financial center we need to be at the forefront of development,” Wigley added.