The United Kingdom could add as much as £33 billion ($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 report released this week. 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 the crypto sector, the report sets out a 12-month plan to test blockchain in a financial transaction where securities are used to borrow cash. It also calls for the UK to issue its first tokenized government bond — a digital gilt — by the first quarter of 2027.
The initiative represents a significant step in the UK's ambition to become a global hub for digital asset innovation. The report emphasizes that the time has come to move “from pilots to scale” and “from ambition to action.” It argues that while numerous pilot projects have demonstrated the technical feasibility of tokenized securities, the real economic benefits will only materialize when these instruments are integrated into live markets for trading, settlement, and collateral use. The task force brings together heavyweights such as BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley, HSBC, UBS, Coinbase, Circle, Ripple, Kraken, DTCC, and Euroclear — signaling broad institutional support for the roadmap.
Potential economic impact and industry backing
The £33 billion annual boost to GDP by 2035 is not merely a hypothetical figure; it is derived from modeling that assumes widespread adoption of tokenization across wholesale financial markets. Tokenization refers to the process of representing traditional assets — such as bonds, equities, and real estate — as digital tokens on a blockchain. This can reduce settlement times, lower costs, increase transparency, and enable fractional ownership and programmability. The report argues that the UK, home to one of the world's largest financial centers, is uniquely positioned to capture these benefits if it acts decisively.
Ripple, a crypto payments firm listed among the task force members, publicly backed the initiative on Monday. “Onchain funds, bonds and repo aren’t experiments,” the company stated, adding that such instruments are already proving “cheaper, better and faster than their legacy equivalents.” This sentiment echoes a growing consensus across the financial industry that distributed ledger technology can streamline back-office processes, reduce counterparty risk, and unlock liquidity. Other task force members have also expressed support, with many already running their own tokenization experiments in other jurisdictions.
Roadmap details: digital gilt and settlement infrastructure
The digital government bond, or gilt, is not a completely new proposal. The UK first announced the Digital Gilt Instrument pilot in November 2024. That was followed by a July 2025 update outlining plans for onchain settlement, over-the-counter trading, and secondary-market development. On February 12, 2026, the government appointed HSBC's Orion platform to support the pilot. The new report adds a concrete timetable and significantly expands the intended role for the financial instrument. Beyond calling for the initial issuance, the report seeks subsequent digital-gilt offerings, live secondary-market trading, and eligibility for use as central bank collateral.
The report notes that tokenized securities have limited value unless they can be traded or used to raise cash. Therefore, it urges the Bank of England to accept digital gilts as collateral in its standing facilities and open market operations. This would effectively give digital gilts the same status as conventional government bonds, making them a core component of the UK's financial infrastructure. The Bank of England has historically been cautious about new technologies, but the report suggests that the central bank is engaging constructively with the proposals.
The UK also already has a blockchain-based wholesale payment infrastructure that could support such markets. In December 2023, London-based Fnality launched a sterling-denominated payment system tied to central bank reserves, designed to support real-time repo transactions, tokenized securities settlement, and cross-currency payments. Fnality's system uses blockchain technology to enable atomic settlement — where payment and delivery occur simultaneously — reducing settlement risk. This infrastructure could be leveraged to settle digital gilt trades and repo agreements in real time, further enhancing efficiency.
Historical context and policy evolution
The UK's push for tokenization is part of a broader global trend. Countries such as Switzerland, Singapore, and the United Arab Emirates have already launched or piloted tokenized bonds and other digital assets. The European Union's DLT Pilot Regime allows for exemptions from traditional trading rules to test blockchain-based markets. The UK, however, is aiming to become the first major economy to fully integrate tokenized government securities into its mainstream financial system. The task force's report is expected to feed into HM Treasury's ongoing review of the UK's digital finance strategy, which includes proposals for a comprehensive regulatory framework for cryptoassets.
Politically, the initiative has broad support. The Labour government that came to power in 2024 has continued the previous Conservative government's focus on making the UK a crypto hub, though with greater emphasis on consumer protection and market integrity. The Digital Securities Sandbox, launched by the Bank of England and the Financial Conduct Authority in 2022, has allowed firms to test distributed ledger technology for issuing, trading, and settling securities under modified regulations. The Woolard report effectively calls for building on those sandbox experiences to create a fully operational digital market.
Challenges and next steps
Despite the optimism, significant challenges remain. Regulatory clarity is still evolving, and the legal status of tokenized assets under English property law has not been fully resolved. The Law Commission of England and Wales has recommended treating certain digital assets as property, but legislation has not yet been passed. Furthermore, interoperability between different blockchain platforms and legacy systems needs to be ensured. The task force acknowledges these hurdles and proposes a phased approach, with the first digital gilt issuance serving as a proof of concept that can be refined over time.
The report also calls for the creation of a common set of industry standards for tokenization, including data formats, smart contract templates, and settlement procedures. This would help avoid fragmentation and ensure that digital gilts can be easily traded across different platforms and used as collateral in a wide range of transactions. The industry task force will continue to meet quarterly to monitor progress and adjust the roadmap as needed.
The next milestone will be the appointment of a technical lead for the digital gilt program, expected within the next few months. Following that, the government and the Bank of England will need to coordinate the final terms for the tokenized bond, including its maturity, interest rate, and legal documentation. If all goes according to plan, the first digital gilt will be issued in early 2027, with secondary market trading and acceptance as collateral following shortly thereafter.
The potential economic prize is enormous. The £33 billion figure represents about 1.2% of current UK GDP. Proponents argue that tokenization could also improve financial inclusion, reduce costs for issuers and investors, and enhance the resilience of financial markets by eliminating single points of failure. As the UK navigates its post-Brexit future, adopting new technologies to maintain its competitive edge in financial services is seen as a strategic imperative.
Source:Cointelegraph News