Key Takeaways

  • Barclays and PwC estimate tokenisation could add up to £33bn to annual UK GDP by 2035, but describe it as a conditional projection, not a guaranteed gain.
  • The Digital Securities Sandbox, launched in 2024 by the Bank of England and FCA, is hosting live tokenised issuance and settlement with around 16 firms.
  • HM Treasury's DIGIT pilot, run on HSBC's Orion platform, would make the UK among the first G7 economies to issue sovereign debt in tokenised form.
  • The FCA finalised core cryptoasset rules in July 2026, while the Bank and FCA set out plans to jointly supervise systemic stablecoin issuers.
  • Regulatory uncertainty, settlement and cyber risk, weak adoption and competition from rival financial centres could all prevent the £33bn being realised.

Summary

UK digital finance could receive a major boost from tokenisation, with a Barclays and PwC report estimating up to £33bn added to annual UK GDP by 2035. Britain is advancing through the Bank of England and FCA Digital Securities Sandbox, the DIGIT tokenised gilt pilot on HSBC Orion, and a new cryptoasset and stablecoin regime, though the projected benefit remains conditional and contested.

The drive to make Britain a global hub for UK digital finance gained fresh momentum this month, after Barclays and PwC estimated that wider adoption of blockchain-based tokenisation could add as much as £33bn to annual UK gross domestic product by 2035. Their joint report, "Rewiring Finance: Tokenisation as a Catalyst for UK Growth", presents the technology as a potential engine for investment and productivity, while warning that the window to capture the prize is narrowing as rival financial centres move quickly.

What is the £33bn UK digital finance opportunity, and who is claiming it?

The £33bn figure should be read as a projection rather than a certainty. According to Barclays and PwC, it represents a potential annual boost to GDP by 2035, conditional on the UK accelerating adoption across financial markets and the wider economy. Matt Hammerstein, chief executive of Barclays UK Corporate Bank, said tokenisation was "moving from theory to real-world application" and, done well, could improve how capital flows through the economy. The authors caution that the larger gains depend on scaling beyond wholesale finance.

Tokenisation means representing money, securities or real-world assets as digital tokens recorded on a shared ledger, often a blockchain. Advocates argue it can compress settlement times, cut the number of reconciling systems that sit between buyer and seller, and free up collateral. For UK businesses and investors, the promised payoff is cheaper transactions, faster access to financing and more efficient trade processes, provided the infrastructure proves both safe and interoperable across different platforms and borders.

The stakes reach well beyond the City. If tokenisation lowers the cost of issuing and trading securities, smaller companies could find it cheaper to raise capital, pension funds could settle trades with less operational friction, and retail investors might eventually access assets that are currently costly to fractionalise. A poorly governed rollout, however, could concentrate risk in new intermediaries or expose savers to instruments they do not fully understand, which is why regulators are proceeding through controlled pilots rather than sweeping change.

Tokenising securities and the Digital Securities Sandbox

Much of the practical experimentation is taking place inside the Digital Securities Sandbox, a regulatory testing environment launched in 2024 by the Bank of England and the Financial Conduct Authority. The sandbox allows firms to issue, trade and settle tokenised securities under modified rules, letting regulators observe live activity before committing to permanent legislation. The Bank has said it is working with around 16 firms on the live issuance and settlement of tokenised assets, spanning bonds, funds and other instruments. The approach is deliberately gradual: activity limits within the sandbox rise in stages, allowing regulators to build confidence in the technology and its operational resilience before permanent rules replace the temporary framework.

In May 2026 the two regulators set out a shared vision for tokenisation in wholesale markets. Simon Walls, the FCA's executive director of markets, said tokenisation could reshape how assets are issued, traded and settled, while Sarah Breeden, the Bank's deputy governor for financial stability, urged public and private sectors to move "from pilots to production". A related consultation on prudential treatment, tokenised collateral and settlement infrastructure closed for industry feedback on 3 July 2026.

DIGIT: testing sovereign debt on the blockchain

The centrepiece of the government's ambitions is DIGIT, the Digital Gilt Instrument. In February 2026 HM Treasury confirmed that HSBC had won a competitive procurement to provide the platform, using its Orion tokenisation system, with legal support from Ashurst. The pilot, run through the Digital Securities Sandbox and separately from the Debt Management Office's routine gilt sales, would place the UK among the first G7 economies to issue sovereign debt in tokenised form.

Lucy Rigby, the City minister, has described DIGIT as a way of "bringing digital innovation to the heart of government", with the pilot designed to test blockchain settlement, interoperability and over-the-counter trading. The contract runs from December 2025 to December 2028, with scope for extension. Officials have stressed that the exercise is experimental: it is intended to build expertise and market plumbing rather than to replace conventional gilt issuance, which remains the backbone of government financing. A successful pilot could nonetheless signal to global investors that Britain is willing to modernise the machinery of its debt markets, potentially encouraging private issuers to follow the state's lead into tokenised instruments.

Crypto, stablecoins and the financial-market infrastructure regime

Alongside wholesale tokenisation, the UK is finalising a broader regime for cryptoassets and stablecoins. In July 2026 the FCA published core rules for its new cryptoasset framework, while HM Treasury advanced a draft statutory instrument amending the Financial Services and Markets Act 2000 to bring activities such as stablecoin issuance and custody within regulation. The Bank of England and FCA have also set out how they would jointly supervise systemic stablecoin issuers whose failure could threaten financial stability.

Industry figures have flagged a tension at the heart of the design. Some argue that rules calibrated for systemic risk could weigh heavily on sterling stablecoins just as they gain traction, while others welcome the clarity that firm regulation brings after years of ambiguity. The FCA has said its aim is to support innovation while protecting consumers, a balance on which it will be judged as the regime beds in and firms begin the transition out of the sandbox.

Underpinning these plans is a push to modernise financial-market infrastructure. The Bank is extending its real-time gross settlement and CHAPS payment systems towards near round-the-clock operation and intends to launch a synchronisation service by 2028 to link tokenised assets with central bank money. A dedicated financial-market infrastructure sandbox gives ministers powers to temporarily disapply legacy rules so that new settlement models can be trialled without rewriting statute in advance. Together these measures are meant to ensure that any move to tokenised markets rests on payment and settlement systems capable of matching the speed the technology promises.

What could stop the £33bn being realised?

Britain is not alone in chasing this prize. The European Union runs its own distributed-ledger pilot regime, while Switzerland, Singapore and several Gulf states have courted tokenised issuance. That competition is precisely why the Barclays and PwC authors argue speed matters: the value of being an early, trusted venue for digital finance could erode if issuers and infrastructure providers settle elsewhere first. Several risks could blunt the projected benefit:

  • Regulatory uncertainty: firms may hesitate while final rules, tax treatment and the path out of sandboxes remain unsettled.
  • Technology and settlement risk: unproven ledgers, cyber vulnerabilities and the difficulty of moving assets safely across platforms.
  • Weak adoption: the gains depend on scaling from pilots into liquid, everyday markets rather than isolated experiments.
  • International competition: rival centres offering clearer or faster regimes could attract issuers and capital first.

For now, the £33bn remains an estimate of what UK digital finance might deliver rather than a booked gain. The building blocks, from the Digital Securities Sandbox and the DIGIT gilt pilot to a maturing cryptoasset regime and modernised settlement systems, are further advanced than they were a year ago. Whether blockchain becomes a genuine growth engine will depend on coordinated action from the Treasury, regulators and industry, and on Britain moving from experiment to scale before competitors close the gap.