Major financial institutions have joined a tokenization working group established with the support of the UK government. According to the report, 54 companies, including BlackRock, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS, will work together to advance the development of tokenized financial markets.
During the first phase, the group will focus on tokenized repurchase agreement, or repo, transactions. The initiative is expected to continue over the next year.
According to the UK Treasury, tokenized markets could generate up to £33 billion in additional annual economic output and as much as £14 billion in annual tax revenue by 2035.
UK Tokenized Markets Could Reach $88 Trillion
The report describes the UK as the world’s leading wholesale capital markets center, processing more than £4 trillion in securities transactions each day on average.
Although tokenized assets represented only 0.01% of total investment assets in 2025, their value increased by approximately 300% over the course of the year.
The report’s authors see significant growth potential in this sector. They estimate that the value of tokenized real-world assets, or RWAs, could reach $88 trillion by 2035. For comparison, the current combined market value of cryptocurrencies and stablecoins stands at around $3 trillion.
The authors also warned that delays could weaken the UK’s position. Without a clear national strategy, technical standards and market infrastructure could be developed elsewhere, potentially undermining the country’s role as a global financial center.
The UK has already taken several steps toward blockchain-based financial infrastructure. It plans to become the first G7 country to issue sovereign debt securities on a blockchain through the DIGIT pilot project.
According to the report, speed will be critical. Countries that move faster are expected to capture a larger share of market activity and liquidity while gaining greater influence over the development of global standards.
Working Group to Focus on Nine Specialized Areas
The initiative will be divided into nine specialized workstreams. Four core areas will cover the full transaction lifecycle: primary issuance, secondary markets, collateral management and settlement infrastructure.
The group’s first practical use case will be an end-to-end tokenized repo transaction. The report argues that repo markets provide a suitable foundation for expanding tokenization across secondary markets and could deliver some of the largest efficiency gains.
A separate coordination group will oversee the initiative. Its responsibilities will include ensuring interoperability between different systems and organizing cross-border testing.
The report also calls for concrete action from the UK government and financial regulators. Recommendations include completing a priority DIGIT trial issuance no later than the first quarter of 2027 and ensuring that the Bank of England is prepared to accept the securities as collateral.
Tokenized Payments and Stablecoins Will Be Essential
The authors placed particular emphasis on payment infrastructure. They argued that large-scale tokenization will not be possible without reliable settlement mechanisms, including tokenized bank deposits and regulated stablecoins.
These payment instruments would allow transactions involving tokenized securities to be settled efficiently and reduce dependence on traditional systems that may not operate continuously.
The report concludes that the foundations for tokenized financial markets are already in place and that the UK should now move beyond isolated pilot projects toward a fully operational market.
The first live test of an end-to-end tokenized repo transaction is expected to take place by spring 2027.
