On 29 October 2026, the Bank of England (BoE) published a paper on draft supervisory expectations for central counterparties (CCPs) seeking to accept tokenised forms of eligible collateral. The expectations would apply where the collateral is eligible under the BoE’s proposed UK CCP Rulebook. The draft supervisory statement would clarify how the BoE proposes to apply the regulatory framework to tokenised collateral, rather than establish a separate regime. It would apply to UK CCPs and recognised non-UK CCPs that are, or are likely to become, systemically important to UK financial stability.
In this article
What does this mean?
The Existing framework, with token-specific expectations
The BoE’s starting point is that tokenisation does not determine whether an asset is eligible as collateral. Eligibility would be determined under the UK CCP Rulebook. This consultation instead sets out the BoE’s proposed supervisory expectations for CCPs that want to accept eligible collateral in tokenised form. A CCP would continue to use the relevant approval process before accepting new collateral. This includes an asset already accepted by the CCP where its tokenised form introduces different delivery, credit or liquidity risks. The draft supervisory statement does not require CCPs to accept tokenised collateral or create separate eligibility criteria for tokenised assets.
Liquidity, valuation and access to value
The BoE proposes that a CCP should assess the liquidity and valuation characteristics of tokenised collateral in its tokenised form. It should consider price formation, market data, conversion between tokenised and conventional forms, market operating hours and the reliability of valuation inputs in stressed conditions. Where no conventional equivalent exists, the BoE expects a conservative methodology and ongoing assessment of market depth and liquidity.
The assessment should cover the practical steps required to mobilise and liquidate the collateral. Dependencies may include platforms, custodians, tokenisers, bridges and conversion mechanisms. Faster transfer under normal conditions would not, by itself, demonstrate that a CCP could realise the collateral’s value following a clearing member default.
Legal certainty, credit risk and concentration
A CCP should understand when a transfer becomes final and irrevocable, which record establishes ownership, and how its rights can be evidenced and enforced. This includes reconciling records held across ledgers, infrastructures and intermediaries, and assessing whether permissions, governance arrangements or technical features could restrict transfer or liquidation.
The BoE also expects CCPs to identify additional credit exposures arising from the tokenised arrangement, including exposures to tokenisers, platform providers, custodians and wallet providers. Concentration assessments should aggregate tokenised and conventional exposures to the same underlying issuer, guarantor or asset, while separately considering risks specific to the tokenised arrangement.
Operational resilience, custody and future assets
The draft expectations cover the end-to-end arrangement, including ledgers, smart contracts, interfaces, bridges, permissions, wallets and cryptographic keys. A CCP should assess how disruption, cyber incidents, service-provider failure or changes initiated by another entity could affect its access to, control over, transfer of or ability to realise tokenised collateral. It should also consider recovery arrangements and the implications of extended or near-continuous operating hours.
Custody and safeguarding assessments should address segregation, legal enforceability and continued access if a custodian or another provider fails or loses its authorisation. The BoE is also seeking evidence on whether the proposed expectations would be appropriate for a broader range of assets, including regulated stablecoins, tokenised money market fund units and tokenised gold. The consultation does not make these assets eligible collateral.
What do firms need to do?
Define the assessment framework: Establish the evidence required to demonstrate that tokenised collateral meets the relevant eligibility and risk-management requirements.
Test access to value in stress: Assess whether tokenised collateral can be valued, mobilised and liquidated reliably following a clearing member default.
Map the end-to-end arrangement: Identify the legal, operational and third-party dependencies that could affect control, transfer or realisation of tokenised collateral.
CCPs considering tokenised collateral should define how they will assess each proposed arrangement under their existing collateral approval processes. The assessment should distinguish the risks of the underlying asset from those arising from its tokenised form, including any additional credit exposures, transfer restrictions and dependencies on conversion mechanisms. CCPs should also determine what evidence they will require to support approval and ongoing monitoring.
CCPs should test their ability to access and realise the value of tokenised collateral in stressed conditions. This should include the reliability of prices and valuation inputs, available market depth, operating hours, and the time and steps required to mobilise or liquidate the asset following a clearing member default. A key challenge will be demonstrating that faster transfer under normal conditions results in reliable access to value when markets or service providers are under stress.
CCPs should map each arrangement from end to end, covering the ledger, authoritative ownership record, custodian, tokeniser, wallet, cryptographic keys, smart contracts, interfaces and any bridges or conversion mechanisms. They should establish when transfers become final and irrevocable, how ownership and security interests can be evidenced and enforced, and how they would retain access if a critical provider or system became unavailable. Existing operational resilience, custody, outsourcing, concentration risk and default-management arrangements should capture these dependencies rather than treating tokenised collateral as a standalone technology initiative.
Next steps
The consultation on the draft supervisory expectations closes on 12 February 2027. The BoE has not specified when it will publish its final supervisory statement on tokenised collateral.
Separately, the BoE expects to publish its policy response and rules for the UK CCP Rulebook in Q4 2026, following its earlier consultation on the Rulebook. The Rulebook will provide the underlying regulatory framework within which the proposed supervisory expectations for tokenised collateral would operate.
Contacts
James Moseley
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