Gate 2 Allows Live Activity but Not an Unrestricted Market
ClearToken CSD has passed Gate 2 in the Bank of England’s Digital Securities Sandbox. That allows it to operate a digital securities depository and carry out live activity within defined limits. Eligible securities held through different banks can be tokenized and represented as a fungible instrument, with ClearToken aiming to preserve the same identifying and legal characteristics across conventional and digital forms.
The sandbox status is a regulatory milestone, but it should not be described as a full, unrestricted authorisation for every proposed service. The partnership says 24/7 clearing remains subject to Bank of England approval. ClearToken Depository, a separate group entity, is already authorised by the Financial Conduct Authority as a payment institution and registered as a cryptoasset business.
That entity map matters. Depository, securities-settlement and prospective clearing functions carry different permissions and risks. The group can integrate them operationally, but market participants need to know which legal entity holds cash, records securities, performs settlement and becomes responsible if an instruction fails.
Delivery-Versus-Payment Has to Work Across Different Money Forms
The planned settlement model pairs delivery of the security with payment so that one side does not complete without the other. Traditional infrastructure already uses delivery-versus-payment to reduce principal risk. The new problem is making it work across bank money, tokenized deposits and stablecoins that may sit on different ledgers or follow different operating rules.
A stablecoin can transfer outside banking hours, but its legal claim, redemption process and liquidity are not identical to commercial-bank money. A tokenized deposit remains a claim on the issuing bank and may not be accepted by every counterparty. Interoperability therefore needs more than technical messaging. It requires rules for which cash assets qualify, how they are valued and what happens if a network or issuer becomes unavailable.
FinanceFeeds has covered the parallel effort to bring institutions onchain through Bitpanda’s Vision Chain. That project focuses on issuance and regulated access. ClearToken’s emphasis is the neutral post-trade layer where assets and money change hands.
Fungibility Is Intended to Prevent a Split Market
ClearToken wants eligible securities held at different banks to be recognized as a single fungible instrument. The objective is to stop a tokenized version from becoming an isolated asset with separate liquidity and legal treatment. If a digital representation uses the same security identifier and preserves holder rights, institutions can move it into new settlement workflows without creating a competing instrument for each network.
That is a difficult standard. A token on one blockchain and a record in a conventional central securities depository may be economically linked while remaining operationally separate. Reconciliation, corporate actions, freezes and error correction must remain consistent. A bridge that creates duplicate or temporarily unmatched claims would undermine the fungibility the model is intended to deliver.
Consensys is expected to provide tokenization infrastructure, wallets, interoperability and access to institutional clients. Its role is particularly relevant in a market with several permissioned and public networks. Institutions are unlikely to accept a settlement model that requires all participants to migrate to one chain.
24/7 Settlement Can Reduce Risk and Create New Intraday Demands
Continuous settlement can shorten the period during which counterparties owe assets or cash to one another. It can also let firms mobilise collateral for a few hours instead of borrowing against it for an entire day. Those benefits become valuable when trading continues across regions and treasury teams need to move collateral after local market cut-offs.
The change also eliminates the overnight pause used for maintenance, reconciliation and exception handling. Banks will need continuous sanctions screening, liquidity management, cyber monitoring and operational coverage. A trade that settles at 3am requires the same legal and technical certainty as one processed during London business hours.
The need mirrors the trading side of the market. Continuous derivatives access can expose a gap between platform hours and underlying liquidity. Perpetual-futures connectivity extends execution, but settlement, collateral and risk processes must extend with it.
FinanceFeeds has also examined 24/7 perpetuals linked to traditional assets. Those contracts demonstrate the demand ClearToken is addressing from the post-trade side: if execution becomes continuous while collateral and cash movement remain tied to banking cut-offs, institutions retain funding gaps even after the trading venue stays open.
The Partnership Still Has to Prove Production Interoperability
ClearToken Chief Executive Ben Santos-Stephens said wholesale markets need infrastructure that works across the banks, assets and ledgers already in use. Consensys President David Cunningham said the combination could support round-the-clock operations while reducing risk. Those objectives are credible, but the release does not identify production clients, supported networks or a timetable for the full service.
The institutional test will be operational. Banks will want evidence on throughput, outage handling, privacy, settlement failure procedures, key management and integration with existing treasury systems. They will also need certainty that a tokenized asset can return to conventional infrastructure without losing priority or legal identity.
Other markets show why the distinction matters. Tokenized stock products can reference securities without giving holders the same direct claim as a brokerage position. ClearToken is pursuing a different model: preserve the security inside a regulated market-infrastructure perimeter and change the settlement rail. If it succeeds, tokenization becomes less about creating a new asset and more about making an existing one usable at any hour.
