UK, France Step Up Digital Asset Regulation as Bank of England Explores Tokenised Collateral

European regulators are taking fresh steps to strengthen oversight of digital assets, with the United Kingdom examining the use of tokenised collateral in financial markets and France advancing legislation on crypto-asset tax reporting.

The developments, announced in the final week of October, reflect two important aspects of the evolving digital asset regulatory landscape: integrating tokenisation into established financial market infrastructure and improving transparency around digital asset transactions.

In the UK, the Bank of England (BoE) has initiated a consultation on allowing central counterparties (CCPs) to accept tokenised forms of eligible collateral. Separately, the Financial Conduct Authority (FCA) has reached a settlement with cryptocurrency exchange HTX over violations of financial promotion regulations.

In France, the Senate has approved legislation to implement the OECD's Crypto-Asset Reporting Framework (CARF), which aims to facilitate the international exchange of digital asset transaction information between tax authorities.

Bank of England Explores Tokenised Collateral in Financial Markets

The Bank of England launched a consultation on October 29 to examine how central counterparties could incorporate tokenised assets into their collateral arrangements.

The proposal focuses on enabling CCPs to accept tokenised versions of eligible financial assets, including government bonds, as security against potential losses arising from transactions between financial institutions.

CCPs play a critical role in financial markets by standing between counterparties to trades, helping ensure settlement and managing risks if one party defaults. The acceptance of tokenised collateral could potentially make the process of transferring, tracking and managing these assets more efficient.

According to the Bank of England, tokenisation could improve the mobilisation and management of collateral, including across jurisdictions. It could also help financial institutions respond more effectively to margin calls while supporting innovation in central clearing infrastructure.

The central bank has clarified that the existing regulatory framework does not prevent CCPs from accepting tokenised forms of eligible collateral, provided these assets satisfy the necessary requirements.

These include the ability to value, transfer and realise the collateral when required, including during periods of market stress.

As part of the consultation, the BoE has also proposed a Supervisory Statement outlining how it would assess applications involving tokenised collateral.

The consultation will remain open until February 12, 2027. The central bank has invited feedback from clearing houses, financial institutions, infrastructure providers, technology companies and other market participants.

The initiative forms part of the UK's broader efforts to encourage responsible adoption of tokenisation across financial market infrastructure while maintaining financial stability.

FCA Settlement With HTX Signals Tighter Oversight of Crypto Promotions

Alongside its exploration of tokenisation, the UK is reinforcing its enforcement approach towards digital asset businesses.

On October 28, the Financial Conduct Authority secured a court-backed settlement with cryptocurrency exchange HTX, formerly known as Huobi. The agreement requires the platform to exit the UK market and refrain from targeting or soliciting British consumers.

The FCA had initiated legal proceedings against HTX in October 2025 over alleged violations of the country's financial promotion regulations.

The regulator's complaint concerned the exchange's digital asset promotions across its website and social media platforms, including TikTok, X, Facebook, Instagram and YouTube. According to the FCA, these promotions were not communicated through any of the legally permitted channels.

The UK's financial promotion regime requires businesses marketing crypto-asset products and services to consumers to comply with specific safeguards. These include prominent risk warnings and a 24-hour cooling-off period for first-time investors.

The regulations also prescribe four permitted routes through which crypto-asset promotions can be communicated, including approval by an authorised person or communication by an FCA-registered crypto-asset business.

Violations of these requirements can constitute a criminal offence, carrying penalties of up to two years' imprisonment, an unlimited fine, or both.

Under the settlement, HTX is no longer operating in the UK. Consumers cannot make deposits, new users cannot register, and the exchange has agreed not to actively approach UK customers.

The FCA has reiterated that overseas incorporation does not exempt digital asset businesses from complying with British financial regulations when they target consumers in the country.

The development underscores the regulator's continued focus on bringing crypto-asset businesses within the scope of established financial promotion and consumer protection requirements.

France Moves Forward With OECD Crypto-Asset Reporting Framework

Meanwhile, France is advancing efforts to strengthen tax transparency in the digital asset ecosystem.

The French Senate passed a bill on October 27 to introduce the OECD's Crypto-Asset Reporting Framework (CARF) into the country's legal system. The legislation has now moved to the National Assembly for further consideration under Bill No. 3421.

CARF is an international tax transparency framework developed by the Organisation for Economic Co-operation and Development (OECD). Published in June 2023, it aims to establish common reporting standards for digital asset transactions and facilitate the automatic exchange of relevant information between participating jurisdictions.

The framework is intended to address tax evasion and avoidance risks associated with the growing use of crypto-assets by enabling tax authorities to obtain information about digital asset transactions conducted by their residents across borders.

According to the OECD's September 2026 update, 77 jurisdictions have committed to implementing CARF.

Most European Union member states, apart from Cyprus, along with the UK, have committed to initiating their first information exchanges by 2027. The United States has set a later timeline, with its first exchanges expected by 2029.

France's proposed legislation represents another step towards aligning its domestic tax reporting framework with international standards for digital asset transactions.

What These Developments Mean for the Digital Asset Industry

The latest regulatory developments across the UK and France highlight the growing emphasis on integrating digital assets into established financial systems while strengthening oversight.

The Bank of England's consultation signals an interest in exploring the operational benefits of tokenisation within traditional financial market infrastructure. At the same time, the FCA's action against HTX demonstrates that digital asset platforms remain accountable to local financial promotion regulations, irrespective of where they are headquartered.

France's progress on CARF adds another dimension to this evolving framework, with international information-sharing mechanisms becoming increasingly important for monitoring digital asset transactions.

Together, these developments point towards a regulatory environment in which innovation in digital financial infrastructure is being accompanied by greater emphasis on market integrity, investor protection and financial transparency.