FCA just published its feedback statement (in partnership with the BoE) on tokenisation in wholesale markets.
Statement
Summary of the most frequently raised points from respondents:
- Speed - Firms wanted faster progress, for example on the prudential treatment of tokenised assets, CASS rules, synchronisation and tokenised deposits. They wanted assurance that the Roadmap would come with clear timelines and implementation milestones.
- Pilots - Respondents supported our proposals to progress from sandboxes and pilots and towards full production, scale and permanence, and from strategy towards implementation. For example, a long-term model for settling digital securities, after the Digital Securities Sandbox (DSS), and recurring Digital Gilt Instrument (DIGIT) issuances.
- Collateral - Collateral was by far the most frequently mentioned use case. Respondents wanted further clarity on the eligibility of tokenised collateral, to promote collateral mobility. Tokenised Money Market Funds (tMMFs) were frequently mentioned, mainly by buy-side firms.
- Settlement - Firms wanted to ensure that blockchain-settled transactions would be able to access insolvency protections under the settlement finality regulations (SFRs). They also asked for stablecoins to be allowed as settlement assets.
- Prudential - Respondents said that further clarity would be welcome on the meaning of our commitment to treat tokenised and non-tokenised assets the same "where legal rights are identical and underlying risks are comparable". Respondents also asked for further clarification on the application of the Bank's Dear CEO letter.
- Custody - Most respondents favoured applying CASS 6 (the custody rules for traditional investment assets) to the safeguarding of relevant specified investment cryptoassets (RSICs), with targeted overlays for blockchainspecific risks, such as private key management.
- Interoperability - Respondents wanted regulatory work on interoperability to be prioritised by regulators. They emphasised that this was not simply a technical issue. In particular they discussed the need for legal, regulatory, and cross-jurisdictional interoperability (including the need for international alignment with non-UK regulators on settlement and collateral), in addition to developing industry standards and technological interoperability.
- Accountable persons - We said there must be an accountable person for all regulated activities. Respondents welcomed this, though some were concerned that, in practice, this would make it too difficult for firms to make use of decentralised finance (DeFi) technology.
#Digitalassets #Tokenisation #innovationcommunity
- Todor
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Todor Kostov
CFO Consultant and Board Advisor
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