On 25 November 2024, HM Treasury published the text of a speech by the Economic Secretary to the Treasury, Tulip Siddiq MP, outlining the Government’s approach to tokenisation and regulation. In the speech, which was delivered at the Tokenisation Summit on 21 November 2024, Ms Siddiq discussed the initiatives the Government is taking forward in the digital asset ecosystem, including the Digital Securities Sandbox and the wider cryptoasset strategy.

DLT and tokenisation

Ms Siddiq highlights the ‘transformative potential’ of distributed ledger technology (DLT), referring both to cryptoassets and to how DLT might revolutionise traditional markets through tokenisation and the development of other digital assets. She confirms that one of her priorities is to actively support the process of determining how the sector can make the most of the capabilities offered by this technology. The Government’s aim is to find the right balance between giving firms regulatory certainty and ensuring the sector has the space and flexibility to develop the solutions that will have the most impact.

The speech also notes that Labour’s ‘Financing Growth’ paper, published in January 2024, included its ambition to make the UK a global hub for securities tokenisation, through initiatives such as exploring UK sovereign debt issuance using DLT, and taking forward financial market infrastructure sandboxes. Ms Siddiq highlights the progress made on both of these, through the opening of the Digital Securities Sandbox (DSS) and the announcement of a Digital Gilt Instrument (‘DIGIT’) whose pilot issuance will take place in the DSS.

Cryptoassets

On the topic of cryptoasset regulation, the speech provides some important updates on the Government’s plans, including confirmation that:

  • The Government intends to proceed with the new regulated activities for stablecoin, which will be implemented to the same timetable as the rest of the regulatory regime for cryptoassets. This approach is based on the Government’s view that doing everything in a single phase is simpler and makes more sense.
  • The Government does not, however, intend to bring stablecoin into UK payments regulation at this time, as to do so would place additional regulatory burdens on certain stablecoin activities in a way that would not be proportionate based on the current use cases.
  • To address the uncertainty over whether cryptoasset staking services constitute a Collective Investment Scheme under financial services law, which has impacted the provision of these services in the UK, Ms Siddiq notes that it does not make sense for staking services to be treated in this way and the Government intends to proceed with removing this legal uncertainty accordingly.

In terms of timing, the Government aims to engage firms on draft legal provisions for the cryptoasset regime, including stablecoins, as early as possible in 2025.