An examination of programmable settlement, institutional records, and the potential infrastructure role of BSV Blockchain

On October 1, 2026, Sasha Mills, Executive Director for Financial Market Infrastructure at the Bank of England, delivered a speech examining the future of digital assets and the institutional requirements that will determine their practical use.

Her remarks addressed a challenge extending beyond the technological possibilities of tokenization. Securities can be represented digitally, contractual processes can be automated, and assets can move between distributed systems. The more demanding task is ensuring that these activities produce legally dependable and commercially useful outcomes.

One observation from her speech captures the issue:

Faster technology does not automatically produce clearer legal effect.

Moving an asset’s digital representation is not necessarily the same as transferring its legal ownership. Similarly, a transaction completed on a blockchain does not automatically establish that every institution involved recognizes the corresponding settlement as final.

The distinction concerns the relationship between records, rights, obligations, and the institutions responsible for maintaining and enforcing them.

A technical paper published in November 2025 by UK financial-technology company Tokenovate examines these questions through a proposed programmable settlement framework called Novat. The paper also identifies BSV Blockchain as a preferred technical foundation for its design.

Together, the institutional developments and the technical proposal provide an opportunity to examine how public blockchain infrastructure might support the settlement of financial assets within established legal and operational frameworks.

The Difference Between a Token and Settlement

Consider a transaction in which one financial institution sells a government bond to another.

The buyer must deliver payment, and the seller must deliver the security. For the transaction to settle properly, the participating institutions must recognize that both obligations have been fulfilled and that the resulting ownership and payment records are legally effective.

The process becomes more complicated when different custodians, settlement systems, and jurisdictions are involved.

A custodian holds or administers financial assets on behalf of another party, while a central securities depository, or CSD, maintains securities records and supports their settlement. A transaction may therefore pass through several systems whose records must ultimately agree.

Tokenizing the bond does not, by itself, resolve these relationships.

A blockchain can record that a token has moved from one address to another, but the legal meaning of that movement depends on the arrangements governing the underlying asset. The token might represent ownership, a contractual claim, or evidence that a particular obligation has been performed.

The distinction becomes especially important when a transaction fails, a counterparty becomes insolvent, or ownership is disputed. A blockchain transaction may provide useful evidence, but the rights and obligations of the parties must still be determined according to the relevant legal and institutional arrangements.

The Bank of England’s October speech addressed precisely these concerns, including authoritative ownership records, settlement finality, insolvency treatment, and interoperability with established financial infrastructure.

The challenge is therefore not merely to move digital assets faster. It is to ensure that the movement of digital records corresponds reliably to legally recognized financial events.

The Novat Approach: A Temporary Token for Settlement

Tokenovate develops software for financial institutions involved in post-trade automation, derivatives, collateral management, and securities financing.

Its November 2025 paper, Novat: A Programmable Settlement Protocol for Tokenised Assets, was written by founder and CEO Richard Baker and Chief Legal & Product Officer Ciarán McGonagle.

The proposal begins with a particular approach to tokenization: a digital token does not necessarily need to become a permanently circulating financial instrument.

Under Novat’s proposed architecture, a token serves as a temporary, single-use representation connected to an underlying financial asset or settlement obligation. Its purpose is to coordinate and provide evidence of settlement while remaining linked to an authoritative record of ownership.

The paper describes a three-stage lifecycle: mint, settle, and burn.

When an underlying security is immobilized by its custodian—meaning it is held in place for the settlement process—a corresponding Novat is created. The token can then be transferred as part of fulfilling the settlement obligation. Once the relevant custodian or CSD updates its authoritative record, the Novat is extinguished.

The underlying security continues to exist. What disappears is the temporary token used to coordinate and evidence its transfer.

This differs from issuing digital tokens intended to circulate independently over an extended period. A Novat is designed to exist for a specific settlement purpose and for only as long as that purpose requires.

The paper also describes contractual arrangements intended to connect the temporary token with the underlying financial rights. Participating institutions would define what the Novat represents, which parties are entitled to act upon it, and what legal consequences follow its transfer or extinguishment.

Under the proposed architecture, blockchain transactions provide verifiable settlement evidence, while institutional records and contractual arrangements establish the corresponding legal rights and obligations.

The result is a settlement model in which the token performs a defined operational function while remaining connected to the institutions responsible for the legally authoritative outcome.

A Common Language Before a Common Ledger

Another important component of the Novat proposal is the FINOS Common Domain Model, generally abbreviated as CDM.

FINOS, the Fintech Open Source Foundation, hosts the CDM as an open financial-industry standard developed with participation from organizations including the International Swaps and Derivatives Association (ISDA), the International Capital Market Association, and the International Securities Lending Association.

The CDM provides a consistent, machine-readable way to describe financial products, contracts, obligations, and the events occurring throughout their lifecycle.

Financial institutions frequently represent the same transaction through different software systems, data structures, and operational procedures. Even where the parties agree on the economic substance of a transaction, considerable work may be required to reconcile their records and confirm that each system has interpreted the event consistently.

The CDM aims to reduce this fragmentation by establishing a shared language for financial transactions.

Novat builds on that foundation.

The paper proposes deriving settlement instructions from CDM-defined contractual events, with the resulting information used to coordinate institutional messages and corresponding blockchain transactions.

Complex contractual calculations and lifecycle processing remain within Tokenovate’s automation framework, while the blockchain provides a verifiable record of relevant settlement events. Custodians and settlement systems continue to maintain their respective operational and legal responsibilities.

The objective is to connect contractual obligations, settlement instructions, transaction evidence, and authoritative records through a consistent framework.

This illustrates why a shared ledger and a shared data model serve different purposes.

A blockchain can provide common transaction records, but those records become more useful when participating applications and institutions also agree on how to describe and interpret the activities being recorded.

Technical interoperability therefore involves more than access to a common transaction history. It also depends on common meanings, defined responsibilities, and reliable coordination between systems.

Why the Paper Identifies BSV Blockchain

The Novat paper makes a specific case for the Unspent Transaction Output, or UTXO, model used by Bitcoin-based blockchains.

Under this model, a transaction consumes existing outputs and creates new ones. Individual outputs can carry their own spending conditions and verifiable transaction histories, enabling their creation and subsequent use to be independently examined.

Tokenovate argues that this structure corresponds usefully with the lifecycle of financial obligations. An obligation is created, performed, and eventually discharged. A transaction output likewise has a defined existence until it is spent, providing a traceable sequence of events.

The paper considers this particularly suitable for Novat’s single-use settlement tokens, where each temporary representation must be connected to a particular obligation and extinguished once its settlement purpose has been fulfilled.

The authors also emphasize throughput, predictable transaction-processing costs, privacy arrangements, and verifiable transaction evidence.

Institutional financial activity generates substantial volumes of settlement instructions, collateral movements, confirmations, and related records. An infrastructure layer intended to support these processes must be evaluated according to its operational capacity and cost characteristics.

Within this assessment, Tokenovate identifies BSV Blockchain as its preferred UTXO-based foundation, citing its scaling-oriented architecture, transaction scripting capabilities, and proposed suitability for high-volume processing.

This is Tokenovate’s technical assessment rather than an independently established determination that BSV Blockchain is the only suitable infrastructure. The paper acknowledges that the Novat model could, in principle, operate on another suitable UTXO-based blockchain.

The significance of the assessment lies in the criteria being applied.

BSV Blockchain is evaluated according to an application’s infrastructure requirements: processing capacity, transaction costs, verifiable records, stable protocol rules, and the ability to support institutional workloads.

Within such an architecture, the BSV token serves as the network’s fee-token, while the financial instruments being settled remain distinct from it.

A settlement system involving government bonds, collateral obligations, or regulated digital money does not require the BSV token to become the underlying asset. The blockchain’s proposed role is to provide transaction processing and verifiable evidence for the applications coordinating those assets.

This represents an infrastructure-oriented use of BSV Blockchain in which the value of the underlying technical system is assessed through its practical utility to financial applications and institutions.

The Bank of England’s Synchronisation Lab

The Bank of England’s ongoing settlement-infrastructure work provides a practical institutional setting for examining these proposals.

The Bank operates the United Kingdom’s Real-Time Gross Settlement system, or RTGS, which enables eligible financial institutions to settle payments in central bank money.

Settlement in central bank money is particularly important because it removes the credit exposure associated with relying on a private intermediary’s promise of payment for the final settlement asset.

The Bank is developing a future synchronization capability intended to coordinate RTGS payments with asset transfers taking place on external systems. Its stated ambition is to introduce a live capability in 2028.

The problem arises when an asset moves through one system while the corresponding payment must occur through another. Synchronization aims to coordinate those processes so that completion of one side does not leave the other unresolved.

To explore possible technical arrangements, the Bank established its Synchronisation Lab, a non-live testing environment in which selected organizations can examine settlement use cases and potential synchronization designs.

Tokenovate is among the participating firms. The Bank’s published program identifies its work in conditional margin payments and collateral optimization, with the Novat Protocol forming part of the proposed approach.

The broader question is how experimental settlement architectures can progress toward institutional use. Tokenovate’s participation places its work within an official Bank of England testing program, although the Lab remains exploratory and no decision to adopt Novat or BSV Blockchain follows from that participation.

The relevance of the program lies in the settlement problems it addresses. Coordination between different asset systems and central bank money is a recognized infrastructure challenge, and the Bank is investigating possible technical approaches with industry participants.

Why Institutional Attention Is Moving Toward Settlement

The United Kingdom’s Financial Conduct Authority provided another indication of this direction on September 14, 2026, when it published feedback from a joint consultation with the Bank of England concerning tokenization in wholesale financial markets.

The consultation received 123 responses from financial firms, industry organizations, legal academics, and other participants.

According to the FCA, respondents largely identified post-trade processes as a significant opportunity for tokenization, particularly improving the movement of collateral between financial institutions.

Collateral is an asset pledged to secure an obligation. Its timely availability matters because it supports lending, financing, and the management of financial risk.

When collateral becomes tied up in slow or fragmented settlement processes, institutions may need to maintain additional assets or funding capacity to protect themselves against uncertainty. Improving collateral mobility can therefore have consequences extending beyond the speed of an individual transaction.

The FCA’s findings illustrate a broader institutional interest in the processes underlying financial transactions: how obligations are coordinated, how records remain consistent, and how assets can move efficiently while maintaining legal certainty.

This makes the questions examined by Novat particularly relevant.

The industry’s interest in tokenization extends beyond creating digital representations of existing financial assets. Increasing attention is being directed toward the post-trade infrastructure through which ownership is transferred, obligations are discharged, and financial risk is managed.

The Difference Between Technical and Legal Finality

The Novat proposal also addresses an issue central to financial-market infrastructure: the distinction between technical execution and legally final settlement.

The paper discusses technological, operational, and legal dimensions of finality. These concepts are related, but they do not necessarily become effective at the same moment or under the same rules.

A blockchain can provide verifiable evidence that a transaction occurred according to its protocol. That evidence can be independently examined and, once sufficiently established, becomes difficult to alter without detection.

The legal consequences of the transaction, however, depend on relevant contracts, property rights, institutional records, and applicable law.

Novat proposes connecting these layers through a contractual framework that links each temporary token to an underlying entitlement and synchronizes its lifecycle with the authoritative ownership record.

The approach is designed to address legal enforceability as part of the settlement architecture rather than treating it as a separate question after technical implementation.

Important legal questions nevertheless remain unresolved.

The paper acknowledges that its interpretation of financial-collateral protections has not been fully tested before courts or regulators in this context. Some arrangements may require further legal recognition or designation to achieve statutory settlement finality.

A technically coherent settlement design is therefore not necessarily a legally validated settlement system. Similarly, a successful controlled demonstration does not, by itself, establish commercial-scale operation.

Tokenovate’s wider development work provides another useful distinction.

In September 2026, the company announced a separate controlled demonstration involving an intraday repurchase agreement on the Canton Network, using USDC and the FINOS Common Domain Model.

That work demonstrates that Tokenovate’s settlement research spans more than one technical environment. Its preference for BSV Blockchain in the November 2025 Novat paper should therefore be understood as an architectural assessment rather than evidence that all subsequent Tokenovate implementations rely on the same blockchain.

The longer-term value of any settlement framework will depend on how it performs under actual institutional conditions, including legal enforceability, system failures, disputed transactions, inconsistent records, and cross-border requirements.

A Shared Infrastructure Beneath Institutional Settlement

The Novat proposal brings several distinct functions together within a coordinated design.

The Common Domain Model provides a structured language for financial contracts and events. Tokenovate’s automation framework interprets those events and derives settlement instructions. The blockchain provides verifiable evidence associated with the resulting transactions, while custodians, securities depositories, and contractual arrangements determine the relevant legal rights and authoritative records.

These functions are complementary, but they are not interchangeable.

The broader infrastructure proposition is that participating institutions may be able to coordinate activities through a shared, verifiable transaction layer while maintaining their own legally defined responsibilities.

Public blockchain infrastructure offers a particular technical possibility within this arrangement. A shared public protocol can provide common transaction rules and portable evidence without requiring every application to depend on a database operated by the same private institution.

Whether those advantages are realized in a particular financial application depends on its implementation, contractual arrangements, governance, privacy protections, and operational reliability. A public transaction record alone does not guarantee neutrality or eliminate institutional risk.

Nevertheless, the distinction between infrastructure and the institutions using it remains important.

BSV Blockchain’s proposed role in Novat illustrates how an underlying data infrastructure could support financial applications whose legal and commercial activities operate through established institutional frameworks.

Novat’s temporary settlement token is designed for a specific purpose. Its contractual logic does not require every computation to be executed on-chain, and its legal architecture depends on agreements and authoritative records maintained by participating institutions.

The proposal combines these layers according to their respective purposes, providing one example of how public blockchain infrastructure might be incorporated into institutional settlement processes.

Beyond Tokenization

The Bank of England’s October speech emphasized that digital-asset innovation must move beyond technical demonstrations toward arrangements that markets can rely on, institutions can operate, and legal systems can recognize.

Tokenization may make an asset easier to represent, track, or transfer, but its economic usefulness depends on what those representations enable. A token that moves quickly while ownership remains uncertain has not necessarily improved settlement. Similarly, a blockchain record that cannot be reconciled with the legal obligations of participating parties may be technically valid without completing the intended financial task.

The Novat proposal approaches this problem by connecting contractual obligations, settlement instructions, custody records, and blockchain transaction evidence. Whether the design achieves widespread institutional use remains uncertain, and its legal structure and technical implementation will require further testing and validation.

The broader significance extends beyond the outcome of Novat itself. The longer-term value of public blockchain infrastructure may depend less on the number of assets represented as tokens than on how reliably it supports the activities those assets are intended to enable.

For BSV Blockchain, this points toward a potential role as common, verifiable data infrastructure for applications whose legal, operational, and commercial purposes extend beyond the blockchain itself.

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Notes & Sources

1. Bank of England — New Horizons: The Legal and Commercial Frontier of Digital Assets, Sasha Mills, October 1, 2026.
2. Financial Conduct Authority — FS26/1: Tokenisation in Wholesale Markets, September 14, 2026.
3. Tokenovate — Novat: A Programmable Settlement Protocol for Tokenised Assets, Richard Baker and Ciarán McGonagle, November 2025.
4. Bank of England — Synchronisation Lab, official program and participant information.
5. FINOS — Common Domain Model, technical documentation of the open financial-industry standard.
6. Tokenovate — CDM-Native Intraday Repo Settlement on Canton Network, September 14, 2026.

BSV TIMES — Contributed Analysis

Posted on October 18, 2026 (UTC)