The United Kingdom’s financial services sector faces the risk of losing its influence in the global digital asset market if it fails to accelerate the development of tokenisation infrastructure, according to industry experts. UK Finance, a leading banking body, has called on policymakers to act swiftly to support the growth of digital asset trading and management within the country, warning that delays could result in the sector being dominated by foreign financial hubs.

In a report produced in collaboration with management consultancy Oliver Wyman, UK Finance highlighted concerns that the UK’s £290 billion financial industry could eventually rely on systems designed and governed outside the country, such as in New York, Frankfurt, or Singapore. Tokenisation involves converting traditional financial assets, including bonds and cash, into digital tokens encoded with ownership details, value, and transfer rights. This process enables real-time trading and tracking of assets through automated smart contracts, distinguishing it from conventional electronic money transfers that move cash between standard bank accounts.

The report acknowledged that the UK has been slower to adopt tokenisation technology compared to several other jurisdictions, which have gained an early lead. It warned that continuing at the current pace could erode the UK’s competitive advantage in digital finance innovation. Major banks, including Lloyds and Barclays, have urged the government to speed up the digital transformation of domestic financial markets.

A supporting paper endorsed by a taskforce of 54 prominent financial institutions emphasized the economic potential of tokenisation, suggesting it could contribute hundreds of billions of pounds to the UK economy over the coming decade. UK Finance advocates for a national strategy that integrates tokenised assets and digital money within a unified infrastructure, aiming to position the UK as a setting authority for global digital finance standards.

Bob Wigley, chairman of UK Finance, stressed the importance of establishing market frameworks domestically, stating that failure to do so may force the UK to conform to standards developed by other countries rather than leading the development itself.

In a related move, government ministers requested that the Bank of England provide annual updates on its progress with digital finance initiatives. This directive reportedly stemmed from concerns within the Treasury that the central bank’s efforts to foster innovation in the sector have been advancing at an insufficient pace.