Bank of England opens consultation on tokenised collateral for clearing houses

The Bank of England has launched a consultation on the requirements central counterparties (CCPs) must meet before they can accept tokenised collateral. The UK central bank said the move could make it easier for financial firms to meet margin calls and manage collateral.

The consultation, announced on Thursday, sets out a proposed supervisory statement aimed at giving greater clarity on how the Bank would assess applications from CCPs seeking to accept tokenised collateral. Tokenisation involves representing assets in digital form using technologies such as distributed ledgers.

Existing rules already allow it

The Bank said the current regulatory framework does not prevent central counterparties from accepting tokenised forms of eligible collateral, provided the assets meet the standards required for central clearing. Its approach will follow the principle of "same risk, same regulatory outcome", meaning tokenisation would not automatically change an asset's regulatory treatment.

According to the Bank, tokenisation could enable faster and more efficient transfers of collateral, improve liquidity management and help firms respond more effectively to margin calls.

Conditions firms must meet

The Bank was clear that tokenised assets must remain capable of being valued, transferred and realised when required, including during periods of market stress. Firms must also address risks involving liquidity, custody, cybersecurity, operational resilience and the legal enforceability of ownership rights.

The consultation forms part of broader efforts by the Bank of England, the Financial Conduct Authority and HM Treasury to support responsible innovation in UK wholesale financial markets. The Bank is inviting responses from clearing houses, market participants, technology providers and other stakeholders.

Deadline for responses

The consultation closes on February 12, 2027. Clearing houses and other market participants have until then to submit their views on how the Bank should treat tokenised collateral inside the UK's clearing system.