Collateral management was the winning use case cited by respondents to the UK’s Financial Conduct Authority (FCA) and Bank of England call for input survey, titled “The future of tokenisation: A joint vision from the authorities for UK wholesale financial markets.”
With the survey garnering 123 responses, the results report notes that “Collateral was by far the most frequently mentioned use case. Respondents wanted further clarity on the eligibility of tokenized collateral to promote collateral mobility.”
Improving how collateral moves could transform wholesale operations by:
- Reducing liquidity buffers that firms must hold against trades.
- Enabling real-time margin calculations to manage risk more dynamically.
- Allowing direct posting of tokenised money-market funds as collateral without converting them to cash first.
Also mentioned frequently, mainly by buy-side firms, was the use of Tokenised Money Market Funds.
While respondents broadly support the UK’s current regulatory direction, market participants are calling for faster progress, concrete implementation dates, and clearer rules regarding custody, settlement and prudential treatment.
Moving forward, the regulators will assess whether tokenised assets, including stablecoins, can qualify as eligible collateral within the BofE’s Sterling Monetary Framework operations.
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