Thank you, and good morning to everyone.
It is a genuine pleasure to inaugurate UK Digital Assets Week.
Just across the street lie the Crown Jewels, representing some of the most esteemed assets in our nation, safeguarded by centuries of law, institutions, and formidable security measures. Today, we find ourselves discussing a very different type of asset—digital assets—that will undoubtedly play a pivotal role in shaping our nation’s future and our collective prosperity.
The pressing question we face today is not whether digital technologies will transform financial services; they already have. Instead, we must consider if the UK is prepared to adapt swiftly and decisively to harness this transformation.
My message is straightforward: we are ready, we are acting quickly, and we possess the ambition needed to lead the world in digital assets.
Embracing Technological Change
When we take a moment to reflect on the past couple of centuries, it is evident that we have grown accustomed to technological advancements bringing forth new products and services. However, there are moments when technology fundamentally alters the very infrastructure that underpins our economy.
The transition from paper to electronic trading in the 1980s and 1990s revolutionised our financial markets. I believe that the impending shift from electronic systems to genuinely digital markets will be equally transformative.
This transformation extends beyond merely eliminating paper or upgrading existing processes. It raises critical questions about whether the financial architecture itself can be enhanced. Can assets move more efficiently? Can transactions settle more swiftly? Can collateral be utilised more effectively? Can new forms of currency enhance payment systems? And can technology foster greater competition and innovation within the markets?
This is why digitalisation must not be perceived as a niche technological agenda; it is fundamentally an economic agenda, a competitiveness agenda, and increasingly, a national mission.
The government has the capacity to create conducive conditions. Regulators can offer clarity, instil confidence, and ensure appropriate safeguards. However, it is the firms, investors, and entrepreneurs who will allocate capital, develop products, and compete in the markets of the future. This partnership is crucial for the UK’s success.
Global Collaboration and Future Prospects
As we advance this partnership, it is imperative to collaborate closely with international partners to unlock the benefits of digital assets and prevent market fragmentation. I am acutely aware of this as we prepare for our G20 Presidency in 2027.
Of course, expressing our desire to succeed is the easy part. The real challenge lies in what actions we are taking to realise that ambition, and this is where the UK narrative becomes most compelling.
Last year, we unveiled our Wholesale Financial Markets Digital Strategy, centred on market optimisation, transformation, and leadership. We are eliminating outdated processes, establishing a regulatory environment conducive to the development of new infrastructures, and creating a regulatory framework for cryptoassets and stablecoins.
Moreover, we are placing our own sovereign issuance onto a digital infrastructure. Industry players are leading the way, which is why I appointed Chris Woolard as our Wholesale Digital Markets Champion. His initial report in July posed a clear challenge: tokenised markets are vital for the future of financial services, and the decisions we make today will dictate whether the UK remains at the core of the next generation of global markets.
Progress and Implementation of Digital Assets
Since then, Chris has announced the formation of his industry action groups, uniting firms across the sector to address practical barriers to adoption. It is encouraging to witness the diversity of firms and the seniority of individuals participating in this initiative. I extend my gratitude to all involved for their commitment and enthusiasm.
This commitment is vital. The challenge we face now is not to demonstrate that the technology functions but to create the conditions necessary for widespread market adoption. The potential rewards are significant, and this is a moment for the UK to unite, be bold, and position itself at the forefront of the next generation of global financial markets.
We are witnessing momentum building throughout the system. Take, for example, the Digital Securities Sandbox, designed to provide firms a pathway from testing new technologies to their implementation in live UK financial markets. This journey is now underway.
In July, HSBC became the first firm to gain approval to operate a live Digital Securities Depository within the Sandbox, followed by ClearToken as the second firm to receive similar approval. This represents tangible progress.
Government Initiatives and the Launch of DIGIT
In our efforts to ensure the sandbox continues to serve firms effectively, we intend to introduce secondary legislation in the coming months to support the delivery of digital services and issuances in the Digital Securities Sandbox.
We are transitioning from experimentation to live operations, with digital financial-market infrastructure trading digital securities right here in the UK. The Digital Gilt Instrument – DIGIT – epitomises the government’s commitment to this agenda and its proactive role in digitalisation.
The DIGIT will be a digitally native UK Government debt issuance, launched on the HSBC Orion platform within the Digital Securities Sandbox. The pilot issuance is slated for the first quarter of 2027, and we are taking steps to prepare for potential further issuances, contingent on the success of the initial transaction.
To support the government’s objectives, HSBC and LSEG are collaborating to develop a pioneering bilateral link that will enable investors to access DIGIT through either platform. We plan to list DIGIT as the inaugural digital asset on the LSEG main market, and we are actively engaging the sector to facilitate the delivery of the pilot.
Today, I am pleased to announce the appointment of six firms to serve as Joint Lead Managers for the pilot issuance of DIGIT. This marks a significant milestone for the project and is another step forward in our ambition for digital assets within the UK.
Connecting Traditional and Digital Markets
These institutions bring extensive experience from both traditional sovereign debt issuances and digital markets, reaffirming our commitment to ensuring the success of DIGIT. The United Kingdom’s strength lies in being one of the world’s premier meeting places for international capital, and we aspire for digital capital markets to reflect the same.
One of DIGIT’s objectives is to catalyse the development of Distributed Ledger Technology (DLT), fostering an ecosystem that connects the globe with the UK at its core. Nevertheless, digital securities are merely one facet of this transformation.
To construct genuinely digital markets, we must also consider digital currency. It is futile to innovate one side of a transaction if the other remains tethered to outdated technology. Developments in this area are progressing rapidly.
Our strategy does not involve selecting a singular victor in the realm of digital currency. Instead, our role is to cultivate an environment where responsible innovation can thrive and compete. This includes stablecoins, tokenised commercial bank deposits, and a diverse system where various forms of currency can coexist and be exchanged freely.
Regulatory Frameworks for Digital Assets
In recent months, we have made considerable strides towards implementing this framework. This year marked a pivotal shift in the UK’s approach to cryptoassets, transitioning from discussions about regulatory structures to their actual implementation.
The regulations introduced in February encompass a wide array of cryptoasset activities, which will fall under the FCA regulatory perimeter starting from 25 October 2027. In June, the FCA released a substantial package of final rules and guidance addressing stablecoin issuance, regulated cryptoasset activities, prudential requirements, and more.
Just last month, the FCA published its final perimeter guidance to assist firms in understanding where authorisation will be necessary. The application window opened last week (30 September) for firms seeking to utilise transitional arrangements. This marks a significant advancement.
We want businesses to grow here, to invest, employ, and launch products within our borders. Being a leading centre for digital assets necessitates not only ambition but also robust standards. Trust is an asset, clear regulations are an asset, and a jurisdiction where consumers, investors, and counterparties understand their standing provides a genuine competitive edge.
The Promise of Stablecoins
Our approach to stablecoins embodies this philosophy. Stablecoins possess the potential to stimulate growth and enhance the efficiency of financial markets. They can facilitate faster, more cost-effective transactions, improve settlement processes, and spawn new innovations, including programmable payments.
However, this potential can only be realised with appropriate regulation that ensures stablecoins are indeed stable. This is why we have taken steps to establish a clear regulatory framework for stablecoins in the UK.
Through the cryptoassets regulatory regime, we have established a regulated activity for issuing stablecoins, providing firms with the certainty they need to invest, innovate, and develop. We continue to refine that framework, having laid legislation in September making targeted amendments to the cryptoassets regulations following extensive industry engagement.
These changes aim to offer greater clarity for firms providing stablecoin payment services while eliminating barriers to crucial use cases. As many of you may know, we are consulting on reforms to the payments regulatory framework, including proposals to bring UK-issued stablecoins under the payments services perimeter.
International Cooperation for Progress
The amendments to the cryptoassets regime will ensure that firms are not required to secure cryptoasset permissions now only to seek reauthorisation after the planned payments reforms. Together, these initiatives lay the groundwork