Bank of England Consults on Tokenised Collateral

The Bank of England has launched a consultation supporting central counterparties (CCPs) acceptance of tokenised forms of eligible collateral.

The central bank says tokenisation could offer opportunities for quicker and more efficient mobilisation and management of collateral, including across jurisdictions, noting this could enable firms to respond more effectively to margin calls, improve collateral management and support innovation in central clearing.

The Bank says it does not consider the existing regulatory framework as a barrier for CCPs accepting tokenised forms of eligible collateral, provided the collateral meets the standards required in central clearing. For example, tokenised collateral must remain capable of being valued, transferred and realised when needed, including in stressed conditions.

In order to support CCPs and their participants to explore tokenised collateral, the proposed Supervisory Statement is intended to provide greater clarity on how the Bank of England would assess applications involving tokenised collateral. Consistent with the principle of same risk, same regulatory outcome, different tokenised collateral arrangements may also achieve those outcomes in different ways.

“Through today’s consultation, the Bank is further delivering its secondary objective for innovation in financial market infrastructure, while maintaining financial stability,” says Sarah Breeden, deputy governor for financial stability at the Bank of England. “It’s part of a major agenda between authorities and industry to enable the responsible adoption of tokenisation in financial markets.”

Interested participants have until 12 February 2027 to respond to the consultation, the paper can be found here.