BlackRock, Goldman, JPMorgan join UK tokenization taskforce

The U.K. is pushing tokenization deeper into wholesale financial markets through an HM Treasury initiative that includes more than 50 firms – BlackRock, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley and UBS among them.

The group, backed by the City of London Corporation, will spend the next year working on live tokenization use cases across U.K. financial markets, starting with tokenized repo, according to the first of two reports by HM Treasury's Wholesale Digital Markets Champion Chris Woolard.

The tokenized real-world assets market could reach $88 trillion by 2035, Boston Consulting Group estimates, dwarfing the current crypto and stablecoin market of roughly $3 trillion. Other jurisdictions including the U.S. and the European Union are also exploring how to integrate tokenization into traditional finance.

Woolard's report predicts up to 33 billion pounds ($44.2 million) in additional annual economic output and 14 billion pounds in annual tax revenue by 2035, driven by productivity and cost efficiencies that could benefit global trading centers like London.

Woolard, who spent eight years as chair of the Financial Conduct Authority, addressed the report to the U.K. Chancellor. He emphasized that tokenized markets are "a network game" and the U.K.'s place in that game is not guaranteed.

"Like all network games, it is a race and one where the U.K. needs to move at the speed of the most agile players if we want to ensure we have a stake in developing the approach for international markets," Woolard said.

Kirit Bhatia, chief digital assets officer at Banking Circle, said one of the biggest challenges will be making sure tokenized assets can be funded, settled, mobilized as collateral and moved across different networks.

"Tokenized markets will need payment infrastructure that can support real-time settlement, cross-border movement, multiple forms of regulated money and interoperability between stablecoins, tokenised deposits and existing fiat rails," Bhatia said. "Without that, digital assets risk becoming faster at the edges but still constrained by the legacy plumbing underneath."

Centralized exchange trading volumes rose for the first time in five months in June, with spot climbing 15.3% to $1.11 trillion and real-world asset perpetual volumes surging to a record $311 billion, according to industry data.