FCA Publishes New Guidance on Fund Tokenisation Innovation
The UK’s Financial Conduct Authority (FCA) has published new guidance that clears the path for asset managers to adopt fund tokenisation using distributed ledger technology (DLT), and the industry says this is exactly what it asked for.
The FCA fund tokenisation guidance explains how firms can operate within the regulator’s existing rules while harnessing blockchain-based systems to represent asset ownership digitally. Alongside the guidance, the FCA has also introduced new rules designed to make fund dealing more efficient, including an optional Direct to Fund (D2F) model that allows investors, whether they are accessing traditional or tokenised funds, to transact directly with the fund itself.
Tokenisation, at its core, is a method of representing an asset or ownership of an asset on a distributed ledger. It carries the promise of significantly reducing operational costs while opening up investment opportunities to a much broader pool of investors.
Simon Walls, executive director of markets at the FCA, said the regulator deliberately shaped the guidance around what the market requested. “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,” he said, as reported by FF News.
The Investment Association also welcomed the development. John Allan, director of innovation and operations at the body, described it as a meaningful advance in how the UK approaches funds market infrastructure. He noted the guidance provides confidence around public-chain models where the right controls are in place, and covers the use of digital cash tools for operational purposes. The D2F optionality, he added, gives firms a stronger foundation to align their innovation ambitions with long-term operating decisions.
The stakes are considerable. The UK is home to around 2,600 asset management firms overseeing approximately £16.5 trillion in assets on behalf of UK and global clients, according to the FCA. The regulator views supporting growth and innovation in this sector as central to its strategy.
The policy statement also charts how fund tokenisation could evolve over time, embedding it within the FCA’s broader roadmap for digital assets. For an industry that has long called for regulatory certainty before committing resources to DLT adoption, the FCA fund tokenisation guidance may well mark the moment the conversation shifts from whether to when.
