The United Kingdom Financial Conduct Authority (FCA), the country’s top finance sector watchdog, has set out plans to support tokenization in asset management, including removing barriers to using public blockchains and settling transactions entirely on the blockchain.
The plans were outlined in a consultation announced by the FCA, which aims to provide firms with additional clarity to “aid adoption of this new technology” and “drive innovation and growth in asset management.”
Tokenization is the process of creating a digital representation (or “token”) of a real-world asset (RWA) or digital asset—whether real estate, stocks, or commodities—on a distributed ledger, such as a blockchain. In the context of asset management, tokenization enables assets to be divided, traded, and transferred digitally while maintaining an immutable record of ownership.
According to the FCA, tokenization also has the potential to broaden access to private markets and infrastructure investment, as well as offering further opportunities to improve efficiencies and reduce the costs of fund management. For example, the regulator pointed to how tokenization can lower the costs of sharing and reconciling data between firms involved in operating or distributing funds.
“As the way people invest changes in the future, tokenization…can help asset managers to innovate and stay competitive,” said the FCA, in its October 14 statement. “Tokenised products could drive competition and increase choice for consumers – and open up new ways to distribute funds, including to those new to investing.”
The U.K. is a leading asset management hub, with around 2,600 firms managing £14 trillion ($18.6 trillion) of assets for U.K. and global clients. The FCA said the ultimate goal of its tokenization strategy was to help this sector continue to grow.
Specifically, the FCA’s consultation included guidance on operating tokenized fund registers; an alternative dealing model for fund managers to process buying and selling of units in authorized funds (traditional or tokenized); a roadmap to advance fund tokenization and address key barriers, like using public blockchains and settling transactions entirely on the blockchain; and a discussion on how tokenization models and the relevant regulation could evolve in the future.
The FCA has been consulting on updating and improving the U.K. regime for asset management since 2023. More recently, in January, the regulator sent a letter to Prime Minister Keir Starmer confirming plans to progress its roadmap for digital assets within asset management. The latest consultation is the next step in this ongoing project.
“We stand ready to design the next stage with the industry – this publication suggests a path,” said Walls. “The UK has the opportunity to be a world-leader here and we want to provide asset managers with the clarity and confidence they need to deliver.”
The FCA said the deadline for feedback on its proposals for accelerating tokenization and improving fund efficiency is November 21, while it will receive comments on its “future tokenisation models” up to December 12.
The regulator plans to review the feedback and publish a policy statement with final regulatory requirements in the first half of 2026.
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Source: https://coingeek.com/uk-finance-body-outlines-support-for-tokenized-assets/
