Tokenised Securities Settlement Goes Live in the UK

Tokenised securities settlement has moved from pilot to production in the United Kingdom. On September 18, 2026, the Bank of England approved ClearToken CSD Limited to operate a live Digital Securities Depository, making it the first non-bank to reach that stage of the central bank’s Digital Securities Sandbox and only the second firm overall, after HSBC passed the same gate on July 13, 2026.

The approvals matter less for who got there first than for what they say together: a global bank and a two-year-old market infrastructure startup have both now cleared the same regulatory bar to settle real securities on distributed ledger rails, under the same supervisor, with the same legal force as a traditional depository. That is a different claim than the one the tokenisation industry has been making for years.

What just got approved

The Bank of England’s Digital Securities Sandbox admits firms in stages, called gates. Passing Gate 1 lets a firm test in a non-live environment. Passing Gate 2, formally recorded in a Sandbox Approval Notice, lets it run live activity under caps set by the regulator. ClearToken CSD Limited was admitted to Gate 1 in December 2024 and passed Gate 2 on September 18, 2026, according to the Bank of England’s own sandbox dashboard.

ClearToken’s own announcement of the approval, published the same week, sets out what the live permission actually covers: settlement of tokenised FTSE 350 equities, UK government debt, and both GBP and non-GBP corporate bonds, each subject to a custody limit set by the regulator, 600 million pounds for gilts, 900 million pounds for GBP corporate bonds, and 1.8 billion pounds for non-GBP corporate bonds. The company says the infrastructure supports continuous settlement, including intraday repo, rather than the batch cycles that still govern most securities markets.

“Our approval to operate a live DSD is hugely significant for the market,” said Ben Santos-Stephens, CEO of ClearToken Group, in the company’s release. He argued the real barrier was never the ledger technology itself: “The biggest hurdle for institutional adoption of digital securities has not necessarily been the technology; it has been whether the infrastructure around that technology is sufficiently regulated, robust and legally recognised.”

Why a non-bank clearing settlement is the story

HSBC reaching Gate 2 in July was, in one sense, the less surprising result. A globally systemic bank has the balance sheet, the compliance function, and the existing regulatory relationships to absorb a new supervised activity. ClearToken does not have any of that legacy. It is a dedicated market infrastructure firm built specifically around clearing and settlement for digital assets, and its Gate 2 approval is effectively a regulator confirming that a purpose-built, non-bank operator can meet the same bar as an incumbent.

That is the structural change worth watching. Akash Sharma, ClearToken’s head of policy and regulatory affairs, framed it as a shift in what the UK sandbox has actually produced: “The UK has turned a tokenisation framework into a live, supervised market infrastructure where regulated institutions can settle assets carrying real rights.” He added thanks to the regulators for “a rigorous and proportionate process.”

ClearToken is not the only firm working through the queue. Bank of England sandbox records show Euroclear UK and International, J.P. Morgan Securities, Tradeweb Europe, LSEG B3, and Montis Digital UK, among others, holding Gate 1 approvals as of this year. Each is a candidate to reach Gate 2 with its own version of live tokenised settlement, which means ClearToken’s approval is a marker in a queue, not a one-off.

The UK move also lands in the same week as continued movement on the continent, where the European Central Bank has been extending central bank money settlement to tokenised finance through its own Eurosystem initiative, a parallel track worth reading alongside this one. The pattern in both cases is the same: institutions are no longer content to let tokenisation run on unregulated rails, and are instead building or approving supervised settlement layers under central bank oversight, the same shift already underway in how banks are validating the stablecoin rails they use for payments rather than treating them as experimental.

What it means for the finance leader

For a bank, custodian, or asset manager evaluating tokenised securities, the practical shift is that settlement risk on a chosen venue is no longer a purely bilateral, unregulated bet. A regulated non-bank CSD with a Bank of England sandbox approval, defined custody limits, and a named accountable operator changes the risk conversation with a compliance or treasury committee. Continuous, 24/7 settlement also removes a specific operational cost: the reconciliation and funding drag created by end-of-day batch cutoffs, which forces firms to hold buffer liquidity against settlement timing they cannot control.

For a corporate treasurer or CFO, the near-term relevance is narrower. The custody limits are modest relative to total UK gilt and corporate bond markets, and access still runs through institutions participating in the sandbox rather than direct retail or corporate access. The more useful move now is tracking which counterparties and custodians are building settlement relationships with ClearToken or the other DSS participants, since that is what will determine whether tokenised instruments show up as a practical treasury tool or stay a niche used mainly by the banks already inside the sandbox.

What could still go wrong

The custody limits are a regulator’s way of containing risk while the model is proven, not a sign the system is ready for unlimited volume. ClearToken’s initial asset coverage is also narrow: FTSE 350 equities and sterling-denominated bonds, not the broader global equities, private funds, or digital assets the company has said it eventually wants to support. And the sandbox itself is time-limited by design. The Bank of England will eventually decide whether to convert sandbox permissions into permanent authorisation under ordinary financial market infrastructure rules, and that decision, not the Gate 2 approval, will be the real test of whether this model scales past a supervised pilot.

What is no longer in question is whether a regulator will let a non-bank run live securities settlement on a distributed ledger. As of September 18, one has.

Source: ClearToken