UK government announces digital champion to accelerate use of blockchain in financial sector

The UK government has announced plans to appoint a “digital markets champion” as part of its drive to modernize the way financial transactions are conducted by adopting blockchain-based shared ledgers.

News of the new role was announced by Economic Secretary to the Treasury Lucy Rigby, in a speech on Wednesday at the Digital Assets Week conference in London.

It’s not yet clear who might be in line for the job, but the individual will need to be an industry figure with enough knowledge and connections to get competing agencies – the Bank of England, the UK Treasury, and the Financial Conduct Authority (FCA) – to agree to a common framework.

The government is also setting up a new group, the Dematerialisation Market Action Taskforce (DEMAT), to co-ordinate the UK’s move away from paper-based share certificates. 

Tech suppliers are also being invited to bid to take part in the government’s Digital Gilt Instrument (DIGIT), a platform to issue sovereign debt, Rigby is reported to have said.

The range of initiatives underlines the complexity of migrating the financial system from the manual, paper-based systems that have been in use for centuries to ones that are fully digital.

Token effort

In July, the government set out the arguments for change in its Wholesale Financial Markets Digital Strategy policy paper, saying today’s financial processes are slow, costly, and rely on manual systems, which together stifle financial innovation.

Adopting blockchain Distributed Ledger Technology (DLT) would, the paper argued, allow financial assets to exist as tokens on shared ledgers, overhauling markets by lowering costs, dramatically speeding up transactions, and increasing transparency.

“The ‘tokenisation’ of assets could deliver a step change in market efficiency, for instance by enabling real-time data sharing which could improve transparency and lower operational costs,” the paper said.

“More broadly, it could enable a fundamental reimagining of the way financial markets operate, creating infrastructures that support both existing and new forms of asset issuance, transfer, and ownership.”

Despite this, the UK is at risk of falling behind its international peers in ways that will soon hinder London’s preeminence as a financial hub. The EU already has the EU DLT Pilot Regime and Markets in Crypto-Assets Regulation (MiCA), the US has the Genius Act for stablecoins, and Singapore has Project Guardian.

Additionally, Swift, the global financial messaging network, recently announced that it would introduce blockchain-based ledger as part of its platform, an initiative it has been testing for several years.

The organization is developing a prototype shared digital ledger to accelerate cross-border payments in conjunction with 30 global financial institutions and blockchain company Consensys.

This will eventually extend the Swift platform to validate transactions and enforce rules governing smart contracts, the organization said.

“You may think, ‘Wow, aren’t those opposites? Swift and blockchain. Traditional finance and decentralized finance. Can they really go together?’ In the regulated system of the future, we believe they can. Banks are ready for it. And they’re asking us to play a bigger role,” said Swift CEO Javier Perez-Tasso at the Sibos 2025 conference.

In the UK, progress towards a regulatory environment remains a work in progress, with a lot of detail still unclear. For now, the Treasury and the FCA are still at the stage of producing policy papers.

According to Julia Demidova of FinTech company FIS Global, the first job of the new digital markets champion will be to work with the Bank of England, the FCA, and the Treasury. 

“The champion will try to achieve some kind of consensus between the three parties. We need a champion in this space to reduce some of the frictions that exist,” Demidova told Computerworld. “We haven’t been moving fast enough in comparison to other markets such as the EU, which has a consensus on what MiCA is.”

The UK needs to develop a clear set of priorities as soon as possible, especially over how it plans to support asset classes such as stablecoins, she said. Right now, there is a lack of clarity over whether these can be used for payments.

“The champion will have to establish what’s missing today from the existing regulatory frameworks.” said Demidova.

The UK government has recognized this need. In Demidova’s view, this suggests the digital champion will have the political backing to unblock the regulatory process.

Lurking in the background to all this is the security of technologies that are still unproven under real-world conditions. “These are new, emerging technologies, and this brings some potential cyber security issues that we may not know about. This is a new surface for attacks that might emerge in this ecosystem,” cautioned Demidova.

It’s a debate that will interest IT management, an analyst noted. “The challenge for CIOs is integration. Legacy ERPs weren’t built for immutable, token-based workflows,” commented Dan Silverman, co-CEO at data intelligence company, Balcony.

“Tokenization isn’t just financial, it’s foundational for secure, verifiable data exchange across public and private systems,” he added. The risk is that the effect of uncertainty on businesses is ignored in favor of institutional interests, not least because countries are adopting these technologies at different rates.UK government announces digital champion to accelerate use of blockchain in financial sector – ComputerworldRead More