Bank of England opens consultation on tokenized collateral for clearing houses

On October 29, 2026, the Bank of England opened a consultation on draft guidance for clearing houses accepting tokenized collateral. Open through February 12, 2027, the proposed framework requires digital assets to remain liquid and convertible to cash during market stress. The rules aim to accelerate cross-border margin calls and reduce transfer delays. Building on a May 2026 joint initiative with the Financial Conduct Authority, the central bank also targets a live settlement synchronization service by 2028.

Consultation timeline and feedback

• ▪The Bank of England's consultation on tokenized collateral for central counterparties remains open for industry feedback through February 12, 2027.
• ▪The Bank of England expects to publish its policy response and rules following the tokenized collateral consultation later in the fourth quarter of 2026.
• ▪The Bank of England launched a consultation on central counterparties accepting digital versions of eligible collateral

Requirements for eligible tokenized collateral

• ▪Government bonds serve as a primary example of tokenized collateral in the Bank of England's proposed guidance, while tokenized money market funds remain under review.
• ▪Under the Bank of England proposal, tokenized collateral must remain capable of being valued, transferred, and converted into cash during periods of market stress.
• ▪The Bank of England's proposed supervisory statement covers both tokenized collateral currently used by clearing houses and eligible collateral types under the draft UK CCP Rulebook not yet adopted.
• ▪The Bank of England proposal permits central counterparties to accept highly liquid collateral with minimal credit and market risk, covering cash, financial instruments, bank guarantees, and gold.
• ▪The Bank of England draft supervisory standards require clearing houses introducing new forms of collateral to demonstrate asset eligibility and risk management capabilities.

Benefits for cross-border transfers and settlement

• ▪The Bank of England expects digital representation of collateral using distributed ledger technology to streamline collateral organization and reduce transfer delays between institutions.
• ▪The Bank of England stated that faster cross-border transfer of tokenized assets could help financial firms meet margin calls during changing market prices.

Broader UK tokenization initiatives

• ▪The Bank of England plans to launch a live synchronization service by 2028 to enable simultaneous settlement of tokenized securities and cash.
• ▪In May 2026, the Bank of England and the Financial Conduct Authority established a joint vision for tokenization in United Kingdom wholesale markets, drawing 123 industry responses.