FCA outlines plans to accelerate tokenisation of funds

The Financial Conduct Authority set out plans on 14 October to accelerate the use of tokenisation in fund management, proposing new guidance, a streamlined dealing model and a roadmap to address technical and regulatory barriers. The consultation paper aims to help asset managers use distributed ledger technology to record and trade shares or units in funds, with the stated goals of boosting competition, widening consumer choice and lowering operational costs.

Tokenisation involves creating digital representations of assets on a blockchain or similar distributed ledger. The FCA said tokenised funds could widen access to private markets and infrastructure investments, enable more personalised portfolios, and reduce costs by simplifying data sharing and reconciliation among firms that operate or distribute funds. The proposals include guidance on operating tokenised fund registers under existing rules via the UK Blueprint model, a simplified alternative dealing model for processing purchases and redemptions in authorised funds, and a roadmap to tackle issues such as the use of public blockchains and settling transactions entirely on chain.

Simon Walls, executive director of...