UK crypto leap: Regulated DvP model cuts risk, boosts trust

ClearToken, a London-based digital asset infrastructure firm, has secured regulatory approval from the U.K.'s Financial Conduct Authority (FCA) to launch its crypto settlement platform, CT Settle, marking a significant step in the country's efforts to modernize digital asset markets, according to a Coindesk report. The platform, which employs a delivery-versus-payment (DvP) model, enables simultaneous transfer of assets and payments, eliminating pre-funding requirements and reducing counterparty risk for institutional traders, according to a The Block report.

This innovation mirrors traditional financial systems like CLS in forex, establishing a regulated foundation for crypto trading infrastructure, as noted in a TradingView article.

CT Settle addresses a longstanding inefficiency in digital asset markets: the capital-intensive practice of pre-funding trades on exchanges and over-the-counter (OTC) markets. By allowing assets and fiat currencies to settle concurrently, the platform frees up liquidity for institutions, a critical advantage in 24/7 trading environments, as reported in the Coindesk report. ClearToken's CEO, Benjamin Santos-Stephens, emphasized that the FCA authorization provides a "clear roadmap" for institutional participation, reducing credit risks and fostering trust in digital assets, as reported in a Finextra article. The company is backed by investors including Nomura's Laser Digital and aims to expand its services to tokenized securities through the U.K.'s Digital Securities Sandbox, as noted in the Coindesk report.

The approval aligns with broader U.K. regulatory shifts to integrate digital assets into traditional finance. Earlier this month, the Bank of England initiated consultations on stablecoin rules, while HM Treasury outlined plans to formalize crypto asset definitions and bring key activities under regulatory oversight, as noted in the TradingView article. These moves come amid concerns that the U.K. lags behind the U.S. and Europe in stablecoin adoption. ClearToken's authorization reflects regulators' efforts to close this gap by building infrastructure capable of supporting a "regulated digital asset economy," as noted in the The Block report.

Market analysts have noted the potential for significant growth. U.K. investment firm IG Group projects a 20% expansion in the country's crypto market over the next year as new products and infrastructure take hold, according to the The Block report. ClearToken's platform is also expected to attract foreign firms, as the FCA's registry of licensed crypto service providers now includes the company and X Capital Group, as noted in the Coindesk report. The FCA's decision to approve ClearToken follows criticism from industry players like Consensys, which had previously accused the regulator of stifling innovation with "heavy-handed" oversight, as reported in the The Block report.

Looking ahead, ClearToken plans to seek Bank of England approval for a central counterparty clearing house (CCP), which would further mitigate risks through cross-product margining and multilateral netting, according to the Finextra article. The company's long-term vision includes extending its services to tokenized securities, aligning with the central bank's Digital Securities Sandbox initiatives, as noted in the Coindesk report.

The U.K.'s push to establish itself as a hub for digital finance has gained momentum, with recent measures including retail access to bitcoin and ether exchange-traded products (ETPs). ClearToken's CT Settle platform is positioned to play a pivotal role in this transition, offering institutions the legal certainty and operational resilience needed to scale digital asset adoption, as reported in the TradingView article.