Rathi's tokenisation push: from experiment to adoption in wholesale markets

Nikhil Rathi used a TheCityUK dinner on 22 September to draw a line under the pilot era. The FCA chief executive told an audience at the former Midland Bank HQ that the UK must move from experimentation to adoption, creating the conditions for tokenisation and other emerging technologies to scale safely in wholesale markets (FCA). The backdrop: HSBC Orion has just become the first entrant approved to provide live Digital Securities Depository services (FCA).

Key Executive Takeaways

• The FCA is signalling that tokenisation and on-chain infrastructure should now move from proof-of-concept to production in UK wholesale markets, with the first live Digital Securities Depository already approved.
• Rathi cited estimates of around £33 billion in potential annual UK GDP benefit and £14 billion in tax revenues from these technologies, framing adoption as a competitiveness issue rather than an innovation experiment.
• Firms should expect a hybrid market structure combining traditional and on-chain rails, which raises immediate board-level questions on interoperability, operational resilience, and where to commit capital.

The competitive framing has shifted

Rathi's speech marks a change in tone. Where previous FCA interventions positioned digital assets as a regulatory problem to be contained, this one positions them as a growth lever the UK cannot afford to miss. He cited estimates of around £33 billion in potential annual UK GDP benefit and £14 billion in tax revenues (FCA), and noted that the European Central Bank launched wholesale digital payments in the same week (FCA). The subtext for boards: London's second-place global standing is not guaranteed, and the regulator is prepared to move ahead of legislation to protect it.

Hybrid infrastructure is now the working assumption

The most consequential line for architecture decisions is Rathi's statement that the future market ecosystem is likely to combine traditional and on-chain infrastructure, raising questions about interoperability, market structure and regulatory oversight (FCA). That effectively rules out a clean cutover and rules in a decade of parallel-running complexity. For CFOs and COOs at banks and asset managers, this means budget lines for legacy settlement, custody, and reconciliation cannot be run down on the assumption of imminent replacement. It also means the interoperability layer, not the ledger itself, is where competitive advantage and operational risk will concentrate.

The regulatory posture is agile, not settled

Rathi called for regulation that is agile and reform-minded, enabling innovation while maintaining market integrity, resilience and investor protection (FCA). For general counsel and compliance leaders, agile regulation is a double-edged instrument: it lowers barriers to entry but raises the cost of misreading supervisory expectations. Firms that treated the crypto and digital securities regimes as adjacent to core business now need to fold them into enterprise risk frameworks, because the FCA is explicitly saying it will go as far as it can even where legislation lags (FCA).

The AI overlay

Rathi also placed AI at the centre of the same speech, noting that the pace of development of frontier AI is raising foundational questions about technology infrastructure, cyber and operational resilience (FCA). Read together with the tokenisation message, this is a supervisor telling wholesale firms that two structural shifts are arriving simultaneously and that operational resilience frameworks designed for a slower, single-technology transition will not hold.

The implication is straightforward. Senior leaders who have been waiting for legislative clarity before committing to tokenised infrastructure now have a public signal that waiting is itself a strategic choice, and not a neutral one.