The Financial Services Growth and Competitiveness Strategy sets out a comprehensive ten-year plan to deliver growth and attract investment. Championing innovation is a key priority within this strategy, and the Government is working closely with industry stakeholders and regulators to remove barriers and unlock opportunities presented by new technologies.

Using distributed ledger technology to tokenise funds could support financial market efficiency by enabling more efficient, real-time data sharing which could lower operational costs and enhance resilience.

The Government has published its Wholesale Financial Markets Digital Strategy, which sets out the key steps the UK has to take to digitalise its financial markets, including through the tokenisation of assets. The Government is taking forward various measures in this space, in particular the Digital Securities Sandbox (DSS). The DSS provides a bespoke regulatory framework that enables firms to test, scale and roll out the tokenisation of securities.

Cyber security is a top priority for the Government, and HM Treasury works with the financial authorities, industry and with international partners to strengthen the financial sector’s resilience to threats and hazards of all origins, including cyber risks. This includes the Financial Conduct Authority, whose cyber security requirements mandate firms to have robust governance, effective systems and controls, and comprehensive incident management and business continuity plans.

The Financial Services Growth and Competitiveness Strategy set out a comprehensive ten-year plan to deliver growth and attract investment. Championing innovation is a key priority within this strategy, and the Government is working closely with industry stakeholders and regulators to remove barriers and unlock opportunities presented by new technologies.

Using distributed ledger technology to tokenise funds could support financial market efficiency by enabling more efficient, real-time data sharing which could lower operational costs and enhance resilience.

The Government has published its Wholesale Financial Markets Digital Strategy, which sets out the key steps the UK has to take to digitalise its financial markets, including through the tokenisation of assets. The Government is taking forward various measures in this space, in particular the Digital Securities Sandbox. The DSS provides a bespoke regulatory framework that enables firms to test, scale and roll out the tokenisation of securities. The Financial Conduct Authority (FCA) also recently launched a consultation for a new Direct2Fund model, allowing investors to engage directly with investment funds through blockchain technology.

To manage financial crime risks, fund managers and UK cryptoasset firms continue to be subject to the Money Laundering and Terrorist Financing Regulations, requiring strict supervision, customer checks and suspicious activity reporting.

As the Chancellor set out her Mansion House Speech on Tuesday, we recognise the transformative potential for digital assets and blockchain technologies to drive economic growth in the UK and increase efficiencies across financial markets. We are proceeding with proposals to create a new financial services regulatory regime for fiat-backed stablecoins.

This will support growth in the UK by giving cryptoasset firms the regulatory certainty needed to invest here, and to help drive innovation in our financial services sector whilst at the same time including rules on regulation, safeguarding and market integrity.

The Department for Business and Trade supports the adoption and deployment of technologies to increase productivity in these areas. The upcoming Industrial Strategy will set out our vision and the ambitious set of actions we will take, in partnership with business and academia, to support the tech sector and power the economy of the future. The Industrial Strategy, alongside the upcoming Trade Strategy, will also set out further detail on the steps we are taking to enhance supply chain resilience.

As well, the Department for Transport will publish a new freight plan later this year. While currently under development, we anticipate this will consider the role of technology in enabling the sector to boost economic growth.

The primary existing use-case for blockchain technology is in cryptoassets. The Treasury has confirmed government’s intention to proceed with a financial services regulatory regime for cryptoassets, which will provide valuable protections for consumers and give firms regulatory certainty along with the flexibility to innovate. Blockchain technology has broader use-cases, which are addressed by responsible departments.

This pilot would allow us to make more informed decisions on Distributed Ledger Technology’s (DLT) potential future application to wider government debt issuance. Demonstrating feasibility on a government bond issuance will also support the private sector by providing a use case that will assist their own use and investment in the technology. The pilot puts the UK at the forefront of capital markets innovation. This experimental issuance is separate from the government’s normal operations and overall debt issuance programme. The pilot will utilise the Digital Securities Sandbox (DSS), which opened for applications in September 2024. The DSS utilises temporary modifications to legislation to provide an environment where firms can use developing technology, in particular DLT, to create, trade, and manage securities, under the supervision of the Bank of England and the Financial Conduct Authority (FCA). This enables activity to happen in a controlled and monitored setting, ensuring that potential risks are managed while fostering innovation. I set out in a Written Ministerial Statement on 18 November 2024, that the government will engage with the financial sector in the new year to explore what the issuance could look like and the technology options available to facilitate it.

1. The government is committed to creating a regulatory environment in the UK where firms can innovate, while crucially maintaining financial stability and clear regulatory standards.
2. In line with this, the government has already brought cryptoassets into regulation for anti-money laundering and counter-terrorist financing, and financial promotions.
3. As a result, the Financial Conduct Authority now regulates and supervises qualifying cryptoasset promotions, with the aim of improving consumers’ understanding of the risks and benefits associated with cryptoasset investments, and ensuring that cryptoasset promotions are held to the same high standards as for broader financial services.
4. In October last year, the Treasury published its final proposals for creating the UK’s financial services regulatory regime for cryptoassets.

I refer the Honourable Member to the answer given in response to PQ4875.

My department will continue to monitor developments in the use of both financial and non-financial applications of blockchain technology and will work with other government departments and industry to ensure we maximise its potential to spur UK growth and innovation.

Education on financial matters helps to ensure that young people are prepared to manage their money well, make sound financial decisions and know where to seek further information when needed. Pupils receive financial education through the National Curriculum for mathematics and citizenship which, for secondary school-aged pupils, includes compulsory content covering the functions and uses of money, financial products and services, and the need to understand financial risk.

Schools have flexibility over how they design their curricula, and can tailor it to the needs of their pupils.

The Money and Pensions Service (MaPs) published financial education guidance for primary and secondary schools in England in November 2021 to support school leaders to enhance their financial education provision.

The department will continue to work closely with the MaPs and other stakeholders such as HM Treasury to support the teaching of financial education to children and young people, including novel financial products.

I refer the Honourable Member for Shrewsbury and Atcham to the answer given in response to PQ 4875 and PQ 4876.

This Government is committed to maximising the benefits and minimising the risks of new technologies. The Government has committed to increasing public expenditure on R&D to £20 billion per annum by 2024/2025. This cash increase will support the growth of innovator hubs and continue to fund a range of R&D programmes which will help boost the potential of new technologies including blockchain.

My department will continue to monitor the development of distributed ledger technology to ensure we maximise its potential to spur UK growth and innovation.

The Government is committed to creating a regulatory environment in which firms can innovate, while maintaining financial stability and clear regulatory standards so that people can use new blockchain technologies both reliably and safely.

Cryptoasset markets, for example, continue to develop with increasing pace and complexity, which brings risk as well as opportunity. Risk-taking is a part of the innovation cycle, however ongoing turbulence in the cryptoasset markets has highlighted some of the implications for markets and investors. We think this reinforces the case for clear, effective, timely regulation. The Government is therefore proposing to bring a broad suite of new cryptoasset activities into the regulatory perimeter for financial services for the first time. This includes exchange activities, custody and lending.

HM Treasury launched a consultation on the Future Financial Services Regulatory Regime for Cryptoassets in February and published its response to stakeholder feedback and final proposals on 30 October. The consultation delivers on the Government’s commitment to bring forward proposals for regulating activities relating to the trading and investment of cryptoassets, such as Bitcoin.

The Government has already taken action to address risks to consumers and market integrity in cryptoasset markets. Cryptoassets were brought into scope of UK anti-money laundering legislation in 2020, and following the government’s legislation, the financial regulator has commenced enforcement for cryptoassets financial promotions, requiring them to be fair, clear and not misleading.

More broadly, my department will continue to monitor developments in the use of blockchain technology and will work with other government departments to identify where this could require the introduction of further regulation.

HM Land Registry’s (HMLR’s) Digital Street research and development programme carried out a successful research piece and prototype into Blockchain technologies in 2020 and a summary of the research work can be found here.

The Government strongly believes that there are significant opportunities from digitising HM Land Registry (HMLR) and making more information freely-available. HMLR is also committed to promoting digital innovation in the property market. In recent years, it has introduced digital tools relating to electronic signatures and a standard for digital identity solutions. HMLR is working collaboratively with stakeholders in the conveyancing sector and is considering a range of technologies to contribute to a truly digital, automated conveyancing process.

Government’s Roadmap to a Digital Future includes digital transformation in Government by “automating manual processes”. Almost 90% of HMLR’s applications are received via digital application routes and the majority of HMLR’s services are already automated. HMLR continues to increase automation to drive greater efficiency and deliver maximum value for the taxpayer, and to increase the proportion of end-to-end digital processes.