The Financial Conduct Authority (FCA) has set out its plans to support tokenisation, including guidance to provide clarity to firms and increase the adoption of the new technology.
The regulator said the plans outlined in the consultation would help drive innovation and growth in the asset management sector.
Its proposals included guidance on operating tokenised fund registers under current FCA rules through the UK Blueprint model, and a streamlined alternative dealing model for fund managers to process buying and selling units in authorised funds.
Furthermore, the FCA announced plans for a roadmap to advance fund tokenisation and tackle key challenges, such as using public blockchains and settling transactions on the blockchain, and discussions on how tokenisations could evolve and how regulation may need to change.
The regulator noted that the consultation would also support the delivery of its roadmap for digital assets.
Tokenisation, which is a digital representation of assets on distributed ledger technology, can help asset managers innovate and stay competitive, the FCA said.
It argued that tokenised products could increase choice for consumers and unlock new ways to distribute funds, including to those new to investing.
Additionally, the FCA believed that tokenisation had the potential to improve access to private markets and infrastructure investment, and offer opportunities to improve efficiencies and reduce the costs of fund management.
“Tokenisation has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers,” said FCA executive director of markets, Simon Walls.
“There are many things that firms can do under our existing rules and more that become possible with the changes we propose enacting now. We stand ready to design the next stage with the industry – this publication suggests a path.
“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."
ARK Invest Europe global head of investment products, Rahul Bhushan, added: "We have seen blockchain as a key innovation theme for many years and we believe tokenisation has the potential to streamline operations, reduce costs, and widen access to investment opportunities, making asset management more efficient across the value chain.
"Blockchain-based instruments, including stablecoins, can modernise settlement and broaden access in a responsible way, which aligns with the FCA’s roadmap.
"However, successful adoption depends on clear regulatory alignment and responsible implementation to ensure transparency, interoperability, and investor confidence."
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