UK Mansion House 2025: What this means for digital assets and tokenisation

What has happened?

On 15 July 2025, the Chancellor of the Exchequer delivered her second Mansion House speech alongside a number of documents published by the government and regulators (see our article UK Mansion House 2025 and the Financial Services Growth and Competitiveness Strategy: summary of key initiatives for a detailed summary). From tokenised payments to the digitalisation of capital markets, the UK government has signaled its support for the safe adoption of distributed ledger technology (“DLT”) in financial services, and indicated that it will push ahead with initiatives to introduce further regulatory clarity in this space.

Tokenised Payments

As part of its Financial Services Growth and Competitiveness Strategy, the government will continue to develop the legislative framework for the regulation of payment services and e-money, including by addressing tokenised payment instruments.

Moreover, as part of the National Payments Vision (NPV) (see also our previous article), the government will take steps to foster a secure, innovative and competitive payments and settlement landscape and support interoperability between different forms of digital money, including by:

• developing a regulatory framework for stablecoins;
• continuing to explore a potential digital pound, i.e. the UK’s retail central bank digital currency (and on 16 July 2025 the Bank of England published a Product Design note and a further UK Payments Interoperability Design Note for the Digital Pound);
• enabling DLT-based settlement in central bank money on private platforms through the use of the Bank of England’s omnibus accounts;
• adding new functionalities to the Real Time Gross Settlement service such as a synchronisation interface that facilitates interaction with external ledgers including DLT-based ledgers (see also our previous article); and
• providing greater clarity on tokenized deposits and exploring the use of stablecoins in the Digital Securities Sandbox (see more below on the government’s approach to the digitalisation of wholesale markets below).

A “Payments Forward Plan” is expected by the end of this year which will set out a sequenced plan of initiatives, including in retail and wholesale payments, and the role of digital assets.

Digitalisation of Wholesale Financial Markets

The Wholesale Financial Markets Digital Strategy (WFMDS) identifies three key areas in which the UK plans to drive forward the digitalisation of its wholesale financial markets:

• market optimisation, i.e. driving efficiency and removing frictions through automation, using smart data, and eradicating paper processes from wholesale markets. In particular, the government is committed to taking forward the UK Digitalisation Taskforce’s recommendations on removing paper share certificates (also published on 15 July 2025);
• market transformation, including by leveraging DLT and other technologies such as AI and quantum, providing a regulatory framework which facilitates the development of new digital solutions and acting quickly to make regulatory changes permanent where necessary; and
• market leadership, by working with industry players, other jurisdictions and international bodies to develop a global approach to digitalisation, while reducing fragmentation.

The government intends to appoint an industry expert as Digital Markets Champion to lead and coordinate the private sector’s work in this area, and to join up with work undertaken in other jurisdictions. (Here it is notable that the Bank of England is also currently exploring wholesale settlement of central bank money in its DLT Innovation Challenge, which is open to participants from around the world.)

Digital Gilts: an update

HM Treasury also published an update on the UK’s Digital Gilt Instrument (DIGIT). This development follows the joint policy paper published by HM Treasury and the Debt Management Office in March 2025, which requested views from the industry on shaping the development and delivery of the pilot DIGIT issuance.

In its update, HM Treasury announced a further set of features that it proposes to test as part of the pilot:

• delivering on-chain settlement: the government will prioritise solutions that allow DIGIT to be settled on DLT, including the cash leg of DIGIT transactions;
• enabling settlement of OTC transactions: the government will test the role smart contracts can play in over-the-counter trades, noting that the ability to trade DIGIT on a DLT platform is key to establishing an active market;
• interoperability: the government plans to work with industry, platform providers and existing infrastructure providers to foster interoperability in supporting access to DIGIT from investors operating in both traditional and DLT markets; and
• transparency: the government will explore the potential for DLT-platforms to deliver greater transparency (including visibility with regard to securities ownership) than existing infrastructures.

HM Treasury also noted that it plans to collaborate with the financial services sector in order to further encourage the development of additional DIGIT features such as facilitating collateral mobility, considering listings on DLT and the development of secondary markets.

Final thoughts

The government’s initiatives, and the pace of adoption, will be key to supporting its ambitions to position the UK at the forefront of financial services innovation, particularly in light of the latest developments in the United States (e.g. in relation to federal laws governing stablecoins and other digital assets).

It is worth noting that certain challenges facing UK regulators and policymakers are also being grappled with in other jurisdictions—for example, the tension between regulating for growth without compromising financial stability in the context of stablecoins, and the question of how to best incorporate DLT in the issuance, trading and settlement of financial instruments taking account of the global nature of capital markets.

Further coordination between the UK and major jurisdictions—such as in the form of a UK/US Cross-Border Sandbox, as referenced in SEC Commissioner Hester Peirce’s recent remarks to the City of London Corporation at Guildhall on 16 July 2025 and in the Chancellor’s speech at the Innovate Finance Global Summit on 29 April 2025—will likely yield positive results in the ongoing development of internationally aligned digital asset regulatory frameworks that are fully functional for cross-border transactions across the globe.

Stay tuned as we continue to monitor key developments, and feel free to get in touch with a member of the team. For further resources, visit our Hogan Lovells Digital Assets and Blockchain Hub.

This article is for guidance only and is a non-exhaustive summary only of certain aspects of the points discussed and should not be relied on as legal advice in relation to a particular transaction or situation.

Authored by Bryony Widdup, Christina Wu, Sinead Meany, and Isobel Wright.