A UK government-backed technology working group wants companies to carry out tokenization projects in collaboration with their peers.
The group’s second report on the topic says funds should be able to hold tokenized assets and handle transfers on-chain.
A technology working group backed by the UK government is urging companies to implement tokenization strategies in collaboration with their peers in a new report published on Tuesday.
Tokenization is the digitalization of real-world assets, usually through the use of blockchain technology. Financial institutions around the world are experimenting with tokenization and related settlement systems to improve the efficiency of traditional markets.
Based on industry feedback, the working group says the focus should be on clearing funds with digital money. It also said that funds should be able to hold tokenized assets and use public permissioned networks that allow authenticated users to access the blockchain.
Members of the Technology Working Group include the UK government’s finance department and the Financial Conduct Authority, which regulates the country’s financial sector, including crypto. This new report builds on the group’s November report, in which it urged regulators to provide clarity on tokenization as companies continue to show interest in it.
The report also said that the tokenization of money market fund units used as collateral could help “accelerate the relevant settlement process, thereby expanding the possibilities for this use case.”
The government will continue to talk to companies about the potential benefits of adding distributed ledger technology to government bonds, the report said.
The third phase of the group will focus on artificial intelligence.