Bank of England Opens Consultation on Accepting Tokenised Eligible Collateral at Clearing Houses

Key Facts

On 29 October 2026, the Bank of England launched a consultation on its supervisory expectations for central counterparties seeking to accept tokenised forms of collateral that are already eligible, setting out how existing rules would apply to these assets. The Bank said the current regulatory framework does not prevent the acceptance of tokenised collateral if it meets central clearing criteria, and that the consultation does not create a separate regulatory regime for it. The proposal focuses on digital forms of assets clearing houses already accept and does not open the list of eligible assets to new categories. The Bank is seeking market views on the controls that should apply, including liquidity, valuation, interoperability, settlement finality, credit and concentration risk management, operational resilience and custody. The issue matters because UK clearing houses manage financial contracts with a notional value of hundreds of trillions of pounds each day, according to the Bank.

The benefit outlined by the Bank is the potential to mobilise and manage collateral more quickly and efficiently, including across borders, which could help firms respond to margin calls. Deputy Governor Sarah Breeden addressed this use in a speech on 19 May 2026, noting that global firms could meet margin calls more easily through round-the-clock cross-border transfers using tokenised collateral and near-instant settlement. But faster transfers alone are not enough for an asset to be accepted; the Bank expects clearing house applications to be assessed for liquidity, valuation, transferability and the ability to liquidate collateral when needed, including during periods of stress. Eligible asset criteria continue to require collateral to be highly liquid and subject to limited credit and market risk. Accepted categories include cash, financial instruments, bank guarantees and gold, subject to the applicable conditions.

The consultation places tokenised government bonds at the forefront of potential uses within its scope because they are an asset widely used as collateral by UK clearing houses. The Bank presents stablecoins, tokenised money market fund units and tokenised gold to participants as potential future categories, and asks how far its supervisory expectations should apply to them. The Bank is not currently proposing to add these assets to the list of eligible collateral. Stablecoins in particular would require an amendment to a clearing house rulebook or permission from the Bank to waive or modify the rule to become eligible, alongside any other regulatory approvals. The paper thus distinguishes between considering how to supervise an already eligible tokenised asset and deciding to expand the range of assets that can be posted as collateral.

The Bank warns that faster collateral transfers could reduce the need to hold precautionary margins, but may leave fewer resources available to absorb shocks if market conditions deteriorate. Reliance on the same smart contract programmes could also synchronise collateral management procedures across several institutions. This could lead to linked liquidity demands if many firms need cash or other collateral at the same time. The proposed expectations therefore cover credit and concentration risk management, as well as operational resilience, custody and asset safeguarding. The Bank says an asset’s ability to be valued, transferred and liquidated when needed remains central, even when the technology promises faster settlement.

The consultation is part of a broader effort to apply existing rules to tokenised assets, rather than establish a separate regulatory track for them. In her May speech, Breeden said the Bank aimed to support the eligibility of tokenised versions of assets already accepted as collateral and referred to a discussion paper later that year. The Bank of England aims to deliver a service for synchronising settlement between digital asset ledgers and central bank money in real-time gross settlement accounts by 2028. Responses to the consultation close on 12 February 2027, and the Bank invites clearing houses, their participants, and infrastructure and technology providers to submit their views. The next Monetary Policy Committee meeting is scheduled for 5 November 2026, with the meeting summary and minutes and the Monetary Policy Report due to be published; the current interest rate is 3.75%.