The United Kingdom’s financial regulator has endorsed a blueprint model designed to facilitate the
tokenization of funds for asset management firms.
Investment managers in the United Kingdom are receiving regulatory support to leverage blockchain
technology for the tokenization of funds, breaking away from conventional record-keeping systems.
In a recent report published by The Investment Association (IA), it argued that fund tokenization –
which refers to issuing tokenized units or shares on distributed ledger technology
(DLT) – will lead to a more efficient and transparent financial industry.
In particular, the use of a real-time record keeping system shared across all parties servicing the fund
will reduce fund administration costs, simplify the reconciliation process, as well as allow quicker settlement times.
Sarah Pritchard, executive director of markets and international at the Financial Conduct Authority
(FCA), emphasized that while the regulator is open to exploring innovative avenues for asset managers, it must also delineate the potential risks:
“This is an exciting milestone and paves the way for exploring more transformative use cases in the
future. We want to support firms to implement technological solutions which enhance and strengthen
the UK’s asset management industry, while addressing risks and potential harms.”