UK Regulators Move to Modernize Payments With Tokenization

TLDR

• The Bank of England and the Financial Conduct Authority outlined plans to support tokenization in UK financial markets.
• The regulators invited public feedback on how existing rules affect the safe adoption of tokenization.
• The Financial Conduct Authority confirmed that blockchain records can serve as primary books and records for firms.
• The regulators introduced an interim regime to allow stablecoins to settle unit deals before October 2027.
• The Bank of England plans to extend CHAPS operating hours starting in September 2027.

The Bank of England and the Financial Conduct Authority have outlined plans to modernize the UK’s financial infrastructure through tokenization and extended settlement hours. The regulators issued joint proposals and opened public consultations to gather industry feedback. They said the reforms will support innovation, lower costs, and align the payments network with global markets.

Regulators Outline Tokenization Framework and Seek Industry Feedback

The Bank of England and the Financial Conduct Authority released a joint statement on tokenization in wholesale markets. They said the technology can reshape how firms issue, trade, and settle assets on distributed ledgers. The regulators invited public comments on how current rules support or limit safe adoption.

They asked stakeholders to respond by July 3 with views on infrastructure and regulatory barriers. Simon Walls, executive director of markets at the FCA, said, “Tokenisation has the potential to transform wholesale markets.” He added, “We want to support firms in adopting this technology to lower costs, reduce risk, and unlock new services.”

The FCA also confirmed that blockchain records can now serve as primary books and records. This change removes the need for duplicate off-chain records. The agency published that policy update last month.

The regulators also outlined an interim pathway for stablecoins within UK markets. They confirmed that firms may use stablecoins to settle unit deals under modified rules. The interim regime will operate before the UK crypto framework takes effect in October 2027.

BOE Sets Timeline to Extend CHAPS and RTGS Settlement Hours

The Bank of England published a consultation paper on expanding CHAPS and RTGS operating hours. CHAPS handles high-value and time-sensitive transfers across the UK financial system. RTGS settles those transactions in central bank money.

The central bank said CHAPS will extend its weekday cycle from September 2027. The system will start as early as 1:30 a.m. to overlap with Asian trading hours. The extension will support cross-border activity and improve liquidity management.

The Bank of England plans to introduce Sunday and bank holiday settlement no earlier than 2029. It also intends to expand weekday operations to a 22-hour window, described as 22×6, no earlier than 2031. The consultation on extended hours will accept responses until Aug. 10.

Officials said the reforms will prepare the UK payments network for future digital asset use. They stated that tokenization and stablecoin settlement require flexible infrastructure. The agencies will review responses after the consultation deadlines pass.

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