Unlocking the Potential of Tokenisation and Crypto assets: What It Means for Your Business

Authored by Commercial Litigation and International Arbitration lawyer Andre Yeghiazarian and Corporate Lawyer Tanzum Mozammel

The world of finance is changing rapidly, with modern technologies offering fresh opportunities to innovate and grow. At the recent Tokenisation Summit (delivered on 21 November 2024), the UK government outlined its vision for embracing distributed ledger technology (DLT), tokenisation, and crypto assets. These developments are set to transform the financial landscape.

Why This Matters to Your Business

Innovation is at the heart of the government’s strategy for economic growth, with DLT positioned as a game-changer. Whether you’re looking to streamline operations, reduce costs, or access new markets, the potential of tokenisation and digital assets is immense. These technologies are opening doors to faster, more secure transactions and creating new ways to trade and manage assets.

Key Developments You Should Know

The Digital Securities Sandbox is a major step forward. This initiative, developed by the Bank of England and the Financial Conduct Authority, provides a controlled environment for businesses to test and develop new ways of issuing, trading, and settling securities using DLT. Real transactions are conducted under regulatory supervision, giving firms the space to innovate without the usual legal and operational hurdles.

The government is also leading by example, launching its first Digital Gilt Instrument (DIGIT): tokenised government bonds through the sandbox. This pilot programme will explore how DLT can improve the efficiency of debt issuance while encouraging the wider adoption of blockchain technology across UK markets. These are tangible steps that demonstrate a serious commitment to making the UK a global hub for financial innovation.

The Boston Consulting Group (BCG) predicts that the asset tokenisation market will reach $12.6 trillion by 2030. Firms and asset managers are tokenising real world assets (RWAs), led by giants like BlackRock, Fidelity, and JP Morgan. BlackRock’s tokenised fund, BUIDL, has attracted over £500 million since inception in October 2024. Further, real estate plots of land as tokenised properties are transforming property investments. CitaDAO has recently tokenised a £3.3 million prime London property.

A Balanced Approach to Crypto Asset Regulation

Crypto assets, including tokenised RWAs, are becoming integral to the financial ecosystem. The UK government is introducing new rules to bring clarity and confidence to this area. The Property (Digital Assets etc) Bill has passed its second reading, which aims to recognise digital assets as objects of personal property rights. The bill clarifies the legal nature of tokens and tokenised assets under the private law of England and Wales. You can find out more information on this in Andre Yeghazarian article here.

Stablecoins, in particular, are being regulated as a distinct asset class, ensuring they are backed by sufficient reserves to manage risks. However, they are not yet being brought into payments regulation, giving businesses the flexibility to explore their use without unnecessary constraints.

Additionally, the government is removing uncertainty around staking services, ensuring they are treated consistently with other crypto asset activities. This approach reflects the government’s aim to foster innovation while safeguarding consumers and the market.

Let’s Shape the Future Together

The UK government’s vision is clear: traditional finance and crypto assets have the potential to work together, creating mutual benefits and driving economic growth. Now is the time to explore how these developments could unlock new possibilities for your business.

If you’re ready to take the next step, we’re here to help you navigate the journey. Let’s shape the future together.

Contact Andre via our website today.

For the full transcript, click here.