The UK's Financial Conduct Authority and Bank of England released a joint consultation seeking feedback on tokenization guidance and infrastructure upgrades. The regulators propose extending operating hours for the country's core payment and settlement systems to near-24/7 availability, a move designed to accommodate the emerging tokenized assets market.
Currently, the UK's settlement infrastructure operates on traditional business hours, creating friction for round-the-clock digital asset trading. By shifting toward near-continuous operation, the system would align with how blockchain networks function and enable seamless tokenization of traditional financial assets like equities, bonds, and commodities.
The FCA and Bank of England recognize that tokenization represents a fundamental shift in how markets operate. Digital representations of real-world assets on public and private blockchains require infrastructure capable of matching their operational tempo. The consultation signals the regulators' commitment to positioning the UK as a competitive hub for tokenized finance while maintaining robust oversight.
The guidance addresses multiple layers of tokenization. It covers asset issuance, custody arrangements, trading mechanics, and settlement processes. Regulators emphasize that tokenized assets must meet the same regulatory standards as their traditional counterparts, preventing a regulatory arbitrage gap that could destabilize markets.
Extending settlement hours to near-24/7 operations requires coordination with commercial banks, payment processors, and the Bank of England's RTGS system, which currently settles transactions during defined windows. The shift would eliminate settlement delays that create counterparty risk and capital inefficiency in tokenized markets.
The proposal arrives as major jurisdictions accelerate tokenization initiatives. Singapore, Hong Kong, and the European Union all pursue similar infrastructure upgrades. The UK's consultation period runs until specific deadlines outlined in the regulatory notice, with implementation likely phased across multiple years given the complexity of legacy system integration.
This move addresses a practical bottleneck in tokenization adoption. Without near-24/7 settlement, tokenized assets cannot fully realize their operational advantages over traditional instruments. The UK's approach signals that effective tokenization regulation requires infrastructure evolution, not just rulebooks.