ClearToken Passes Gate 2 in Bank of England DSS
ClearToken CSD Limited has been approved by the Bank of England to operate a Digital Securities Depository within the Digital Securities Sandbox, passing the milestone known as Gate 2. The approval allows the firm to issue and settle tokenised versions of existing securities under Bank supervision, within set limits, and makes it the second firm through Gate 2 and the first non-bank to get there.
The scope is the notable part. ClearToken says it is the first DSD approved to settle tokenised equities and corporate bonds alongside sovereign debt; live services at launch cover FTSE 350 equities, GBP government debt, and GBP and non-GBP corporate bonds, all usable as collateral for securities financing transactions.
The firm is pitching the infrastructure at collateral mobility rather than issuance. Settlement runs continuously, which removes the batch processes and end-of-day cut-offs that govern conventional post-trade; the company claims this enables intraday repo on a 24/7 basis, letting participants borrow against collateral for hours rather than days. Tokenised and traditional lines carry the same ISINs, which is intended to keep the two pools fungible and avoid splitting liquidity.
Further asset classes, including global public equities, private funds, physical commodities such as gold, and digital assets, are planned in phases and require further Bank of England approval.
The depository sits inside a three-entity structure. ClearToken Depository Limited is an FCA-authorised payment institution and registered cryptoasset firm handling the cash leg; ClearToken CSD Limited covers securities settlement; ClearToken CCP Limited has applied to the Bank of England for authorisation as a central counterparty, and that application is still pending.
Ben Santos-Stephens, CEO of ClearToken Group, said:
“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.”
The firm is recruiting institutional participants, investment banks and trading venues into working groups to set operational frameworks, collateral workflows and settlement rules.
