- •The FCA supports tokenisation to modernise UK asset management, offering guidance and clarity to help firms adopt blockchain and improve efficiency.
- •Proposals cover UK Blueprint guidance for tokenised fund registers, a streamlined dealing model, and a roadmap toward on-chain settlement with potential regulatory evolution.
- •Expected benefits include lower reconciliation and data-sharing costs, broader access to private and infrastructure markets, and new distribution channels for investors.
The Financial Conduct Authority (FCA) has taken a significant step toward modernizing the UK’s financial sector by backing tokenisation in asset management. The regulator unveiled a detailed roadmap designed to guide asset managers in adopting blockchain-based models. With this initiative, the FCA aims to make fund management more efficient, cost-effective, and inclusive, reflecting the growing global shift toward digital asset infrastructure.
Tokenisation, which represents assets on distributed ledger technology (DLT), is increasingly seen as the next evolution of investment management. By embracing this technology, the UK seeks to maintain its status as a leading global financial hub while encouraging innovation that benefits both firms and consumers.
FCA’s Roadmap for Tokenised Funds
In its October 14 announcement, the FCA outlined several measures to support tokenisation in the asset management sector. The plan provides clarity for firms exploring blockchain integration and sets the stage for the next phase of digital transformation in fund management.
The proposals include guidance for operating tokenised fund registers under current FCA rules using the “UK Blueprint model”. This model gives firms a compliant framework to begin issuing tokenised units while ensuring existing regulatory protections remain intact. The FCA also introduced a streamlined dealing model, simplifying how fund managers can process the buying and selling of both traditional and tokenised units.
Additionally, the roadmap points to future work on enabling settlement directly on public blockchains, a major step toward reducing friction in fund operations. By digitising fund processes, the FCA expects asset managers to cut costs related to data sharing, reconciliation, and administration.
Simon Walls, executive director of markets at the FCA, highlighted that tokenisation could bring “fundamental changes in asset management” with long-term advantages for both the industry and investors. He added that many innovations can already be implemented under existing rules, and the FCA stands ready to work with the industry to develop the next stage of this transition.
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Benefits for Investors and Industry Innovation
Tokenised funds could reshape how investors access markets. By turning assets into digital tokens, the process of trading, managing, and distributing funds becomes faster and more transparent. The FCA believes this will not only enhance efficiency but also expand opportunities for smaller investors who traditionally face barriers to private markets and infrastructure projects.
For asset managers, tokenisation promises to simplify back-office operations and reduce costs. Instead of relying on multiple intermediaries for record-keeping and reconciliation, blockchain can automate these processes through secure, shared ledgers. This improved efficiency could lead to lower management costs and, in turn, better value for end investors.
Beyond operational gains, the move also aligns with the FCA’s broader digital assets roadmap. It complements the UK’s ongoing efforts to integrate blockchain into mainstream finance, an effort recently echoed by industry participants calling for clearer regulations on tokenisation and stablecoins.
The UK’s Position in Global Finance
With approximately 2,600 asset management firms handling £14 trillion in assets, the UK’s role in global finance is undeniable. The FCA’s proactive stance on tokenisation reflects a commitment to sustaining this leadership by embracing innovation responsibly.
Recent developments, including the regulator’s decision to lift its 2019 ban on crypto exchange-traded notes (ETNs), further signal a shift toward a more open yet controlled approach to digital assets. Combined with the Bank of England’s review of corporate stablecoin rules, the UK appears to be laying the groundwork for a balanced digital finance ecosystem.
As the FCA refines its tokenisation roadmap, collaboration with the asset management industry will be key. The regulator has made clear that while the current framework supports early adoption, future regulatory adjustments will likely follow as tokenisation becomes more widespread.
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A Step Toward a Tokenised Future
The FCA supports tokenisation not as a passing trend but as a structural evolution in how assets are managed and distributed. By setting out clear guidance and engaging with industry stakeholders, the regulator aims to position the UK at the forefront of blockchain-enabled finance.
If executed successfully, this initiative could redefine fund operations, broaden investor participation, and keep the UK’s asset management industry globally competitive, marking a major milestone in the country’s digital finance journey.
