What are the common challenges startups face in equity tokenisation?

The most common challenges include navigating FCA regulatory requirements, selecting the right tokenisation platform, structuring the legal framework for tokenised equity, educating investors unfamiliar with digital securities, and ensuring compliance with the UK Digital Securities Sandbox rules.

What are tokenisation platforms and how do they work?

Tokenisation platforms are regulated technology providers that convert equity or other assets into digital tokens on a blockchain or distributed ledger. In the UK, platforms operating under FCA oversight include those participating in the Digital Securities Sandbox. They handle the technical issuance, custody, and transfer of tokenised securities.

What financial insights should founders know before tokenising equity?

Founders should understand the cost structure of tokenisation (legal, platform, and compliance fees), the valuation implications of fractional ownership, how tokenised equity differs from traditional equity crowdfunding, and the tax treatment of digital securities under UK law.

What investor strategies apply to tokenised equity?

Investors in tokenised equity can benefit from fractional ownership of high-value assets, improved liquidity through secondary market trading on regulated platforms, portfolio diversification across early-stage UK startups, and participation in deals previously accessible only to institutional investors.

What is the UK regulatory landscape for equity tokenisation?

The UK regulatory landscape is governed primarily by the FCA (Financial Conduct Authority) and HM Treasury. Key frameworks include the Financial Services and Markets Act 2023, the Digital Securities Sandbox (DSS), and ongoing FCA consultations on the treatment of tokenised securities. The UK is positioning itself as a global leader in regulated digital securities.

What is equity tokenisation?

Equity tokenisation is the process of converting ownership rights in a company into digital tokens recorded on a blockchain or distributed ledger. These tokens represent shares or equity stakes and can be transferred, traded, or held digitally, subject to regulatory compliance. In the UK, tokenised equity is treated as a regulated financial instrument under FCA oversight.

Think You Know Tokenisation? Eight Questions Every UK Founder and Investor Should Be Able to Answer in 2026

Shawn Jhanji
May 20
5 min read

The tokenisation landscape has moved quickly. New rules, new platforms, and significant market milestones have arrived almost weekly in 2026. Whether you are a founder exploring the idea of tokenised equity for the first time, an investor trying to stay current, or a curious observer still getting to grips with what any of this actually means, these eight questions cover the ground that matters most.

Each answer is grounded in where the UK market actually stands today. No jargon for its own sake. No hype. Just the clearest version of what is genuinely new and why it matters.

1. What exactly is tokenisation, and what problem does it solve?

Tokenisation is the process of creating a digital representation of a real-world asset on a digital ledger. That asset could be a share, a bond, a unit in a fund, a slice of real estate, or a government gilt.

The problem it solves is friction. Issuing a traditional private equity round involves lawyers, share registers, transfer agents, cap table management tools, compliance paperwork, and manual reconciliation at every step. Tokenised equivalents can automate much of that on a programmable ledger, where ownership is recorded, transferred, and audited in real time.

For founders, that can mean lower costs per round and faster closing. For investors, it can mean cleaner records and, eventually, the ability to trade positions they currently cannot move until exit.

2. Is tokenisation legal in the UK?

Yes. The UK has been building a clear regulatory framework since 2023. In April 2026, the FCA published PS26/7, its fund tokenisation policy statement, setting out how authorised funds can operate using distributed ledger technology. The Digital Securities Sandbox has been running since 2025, with 16 firms actively issuing and settling tokenised assets in a live production environment.

On 18 May 2026, the FCA and Bank of England published a joint call for input on the future of tokenisation in wholesale markets, setting out their shared vision and asking for industry feedback by 3 July 2026. The direction of travel from regulators is clear.

3. What is the Digital Securities Sandbox?

The Digital Securities Sandbox is a joint programme run by the FCA and Bank of England that allows firms to issue and settle tokenised securities under a controlled regulatory framework. It is not a simulation. Firms participating are conducting real transactions.

The Sandbox operates under temporary permissions that allow departures from existing rules where necessary to test new technology. Sixteen firms are currently active. The lessons from the Sandbox are feeding directly into the joint regulatory roadmap that the FCA and Bank are developing for 2026 and beyond.

4. What is PISCES and how does it relate to tokenisation?

PISCES stands for Private Intermittent Securities and Capital Exchange System. It is the UK's new regulated trading venue specifically for shares in private companies, launched in 2025.

PISCES is not a tokenisation platform. It is a secondary market where existing shares in private companies can be bought and sold at defined intervals. The London Stock Exchange's Private Securities Market and JP Jenkins' Private Market were the first two platforms approved to operate within the PISCES regime, completing their first trading events in March 2026.

The connection to tokenisation is significant but forward-facing. Currently, PISCES trades conventional shares. But the FCA's framework anticipates that tokenised shares could eventually trade on PISCES-style platforms, combining the liquidity mechanism of a secondary market with the efficiency of digital ledger settlement.

5. What is a tokenisation platform, and how do they differ?

A tokenisation platform is a software service that handles the technical and often legal infrastructure needed to issue and manage digital securities. They vary significantly in scope and regulatory status.

Some, like Securitize in the US and Spain, hold authorisations that allow them to operate as a transfer agent and sometimes as a secondary market. Others, like Tokeny in Luxembourg, are focused on issuance infrastructure and serve institutional clients at scale. White-label platforms like DigiShares and Stobox allow clients to deploy their own branded tokenisation infrastructure. In the UK, Archax holds FCA authorisation and operates as a digital asset exchange and custodian.

For a founder considering tokenised equity, the right platform depends on your investor base, jurisdiction, and how much of the operational layer you want to outsource. These are not interchangeable tools.

6. What does tokenisation mean for how founders raise capital?

The argument for tokenisation as a capital formation mechanism rests on efficiency and reach. A tokenised equity round can, in principle, reduce the legal and administrative cost of processing a larger number of smaller investors. It can automate cap table updates when shares transfer. And it can create the conditions for secondary liquidity earlier in a company's life, which makes early backing more attractive to investors who currently face a decade-long wait for exit.

None of this removes the need for proper securities law compliance, investor qualification, and financial promotions rules. Tokenisation is a set of technical tools, not a regulatory shortcut. But for founders who face high per-investor costs that currently make small tickets uneconomical, the infrastructure is developing in a direction that changes that calculation.

7. What is DIGIT?

DIGIT is the UK government's pilot issuance of a digital gilt instrument, a tokenised version of UK government debt. It is referenced in the BoE and FCA's joint tokenisation statement published on 18 May 2026 and represents the most senior level at which the UK has committed to testing tokenised sovereign securities.

For the broader tokenisation ecosystem, DIGIT matters because government securities are the benchmark asset in capital markets. If tokenised gilts can be issued, settled, and used as collateral in central bank operations, the precedent for tokenised corporate securities and private company equity becomes much stronger.

8. What should founders who are curious about tokenised equity do right now?

Three things.

First, read PS26/7 and the BoE/FCA joint call for input published on 18 May 2026. These are not impenetrable technical documents. They are the clearest statement available of where UK regulation is heading and what it will permit.

Second, look at what is already live. PISCES is operational. The Digital Securities Sandbox has production transactions. Archax is FCA authorised and active. This technology is not waiting for permission to exist.

Third, if you have views on what the regulatory framework should look like, submit them.

The FCA and Bank of England have opened a formal consultation that closes 3 July 2026.

This is rare: a direct invitation from the UK's two most powerful financial regulators to help design the infrastructure your business might one day depend on.

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Key Takeaways

Tokenisation is legal in the UK and the regulatory framework is actively developing across fund tokenisation, wholesale markets, and digital securities.
PISCES and the Digital Securities Sandbox are live infrastructure, not future proposals.
Tokenisation platforms vary significantly in regulatory status and scope. The right choice depends on your investor base, jurisdiction, and operational model.
For founders, tokenisation's promise is efficiency and reach in capital formation, not a shortcut around securities regulation.
The FCA and Bank of England joint call for input is open until 3 July 2026. Founders and platform builders can submit views directly.

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