Tulip Siddiq MP, Economic Secretary to the Treasury, delivered a keynote at this year’s City and Financial Global Tokenisation Summit outlining the UK government’s progressive strategy in embracing tokenisation and digital assets. Her speech underscored the transformative potential of distributed ledger technology (DLT) and reaffirmed the government’s commitment to positioning the UK as a global hub for digital innovation.
Harnessing Distributed Ledger Technology (DLT)
Tulip Siddiq MP highlighted DLT as a driving force in reshaping traditional markets and facilitating the development of new digital asset ecosystems. While acknowledging the challenges of integrating this technology, she emphasised the government’s determination to strike the right balance between regulatory certainty and fostering innovation.
The cornerstone of these efforts is the Digital Securities Sandbox, launched in September by the Bank of England and the Financial Conduct Authority. This initiative allows firms to conduct real transactions in a live, monitored environment with temporary modifications to legislation and regulatory rules. The sandbox offers a platform for creating and trading tokenised securities, driving innovation in capital markets.
Building on this, the government has introduced the DIGIT (Digital Gilt Instrument) pilot. This ground-breaking initiative will see the issuance of a digital gilt within the sandbox, enabling the government to explore how DLT can enhance debt issuance processes. Tulip Siddiq MP described this as a pivotal step, signalling the UK’s commitment to digital asset adoption and DLT innovation.
The Digital Assets Agenda
The speech also shed light on the Digital Assets Bill, currently before Parliament, which aims to clarify property rights concerning digital assets. The government is further exploring innovations in digital funds through the Technology Working Group of the Asset Management Taskforce.
These initiatives are part of a broader ambition to integrate traditional finance with emerging technologies. Tulip Siddiq MP noted that the tokenisation of securities, combined with blockchain-based settlement tools such as stablecoins, could unlock efficiencies like atomic settlement—where payment and asset transfer occur simultaneously.
Regulating Cryptoassets and Stablecoins
Turning to cryptoassets, Tulip Siddiq MP recognised their enduring presence and growing adoption. The government’s approach, she explained, focuses on developing a comprehensive regulatory framework that supports innovation while managing risks.
Key components include:
- New Regulated Activities for Cryptoassets: These activities will cover trading platforms, market admissions, and market abuse regimes. The government intends to implement these measures in full, providing clarity and consistency for firms.
- Stablecoin Regulation: While stablecoins will become a regulated activity under the cryptoasset framework, they will not be incorporated into UK payments regulations at this stage. Tulip Siddiq MP stressed the importance of proportional regulation, allowing stablecoins to evolve organically without stifling innovation.
- Addressing Staking Services: The government plans to remove legal uncertainty regarding whether staking services constitute Collective Investment Schemes, ensuring they are regulated under the forthcoming cryptoasset framework.
The UK’s regulatory approach aligns with recommendations from international bodies such as the Financial Stability Board, reinforcing its position as a leader in global financial innovation.
A Collaborative Vision for the Future
Tulip Siddiq MP concluded by calling for greater collaboration between traditional finance and the crypto sector. She envisions an integrated financial ecosystem where both sectors mutually benefit, driving economic growth and reinforcing the UK’s status as a global financial hub.
With initiatives such as the Digital Securities Sandbox, DIGIT, and the forthcoming cryptoasset regulatory framework, the UK government is laying the groundwork for a vibrant, innovative digital economy. The keynote served as a rallying cry for industry and regulators to work together in harnessing the full potential of tokenisation and blockchain technology.
Tulip Siddiq MP’s address encapsulates the UK’s forward-thinking approach, one that balances innovation with robust regulation, ensuring the country remains at the forefront of the global digital asset revolution.
