Key Takeaways:
The UK’s Financial Conduct Authority (FCA) has established a formal framework for tokenizing investment funds, providing asset managers with clear rules to integrate blockchain technology into their operations. The policy statement, PS26/7, allows firms to move beyond trial programs and represent fund ownership on distributed ledgers under existing regulations.
"Tokenization has the potential to play an important role in the future of asset management," Simon Walls, the FCA’s executive director of markets, said. He noted that firms have been looking for a clear and effective regulatory framework to invest in the technology with confidence.
The new guidance introduces an optional “Direct-to-Fund” (D2F) dealing model, where the fund itself, rather than the manager, is the counterparty to investor trades. This single-step process, in which units are issued directly against cash, is designed to streamline operations and better align with on-chain settlement. The framework also clarifies that fund registers can be maintained on public blockchains, provided firms meet the regulator's standards for security and resilience.
This regulatory clarity is a significant step for the UK’s £16.5 trillion asset management industry, aiming to boost innovation and solidify the country's position as a global hub for digital finance. By allowing firms to operate within the existing legal structure, the FCA seeks to reduce uncertainty and encourage long-term investment in DLT-based market infrastructure, which could lead to faster, cheaper, and more transparent transactions for investors.
The FCA’s initiative extends beyond the current framework, sketching a roadmap toward the wider use of tokenized assets and digital cash. The regulator stated it remains open to granting waivers for funds to use digital cash and stablecoins for settlement and will seek further industry views in 2026 on expanding DLT use in wholesale markets.
This policy is part of a broader push by the UK to regulate digital assets. The FCA is also consulting on a wider cryptoasset regime covering stablecoin issuance, trading, and custody, with a full framework expected to take effect by October 2027.
This article is for informational purposes only and does not constitute investment advice.
