FCA Opens Door To Tokenised Funds With New Guidance

UK regulator, the Financial Conduct Authority, has published its guidance on how the UK’s £10 trillion asset management industry can integrate blockchain technology into its existing rules to unlock the benefits of fund tokenisation.  

The policy paper, PS26/7: Progressing fund tokenisation, follows a consultation and comes as part of the FCA’s Strategy 2025-2030 and its commitment to progressing a roadmap for digital assets as outlined in the January 2025 letter to the Prime Minister.

The FCA says the new rules are intended to “create a positive change environment and encourage growth through improved productivity and increased global competitiveness of UK firms.” It adds that change should be led by commercial propositions and regulation shouldn’t stand in the way of demand and opportunity.

New rules will also make fund dealing more efficient, including an optional Direct to Fund (D2F) model. This enables investors to deal directly with the fund, whether traditional or tokenised. “Tokenisation has the potential to play an important role in asset management, and its adoption will be driven by firms and investors,” Simon Walls, executive director of markets at the FCA states. “We have focused on delivering what the market has asked for: a clear, practical framework that provides confidence in how fund tokenisation can operate within our rules, both now and into the future.”

The paper comes hot on the heels of a consultation the FCA launched about its draft perimeter guidance, which will determine which crypto businesses need to seek licensing registration. The feedback period for that will close on 3 June.

The FCA has also laid the groundwork for another consultation it is launching later in the year about regulatory principles that should govern UK wholesale capital market participants once they adopt DLT.