After years of consultation around digital assets, the UK appears to be moving from discussion to implementation.
The UK’s Financial Conduct Authority (FCA) has issued new rules and guidance that open the door for tokenised fund structures to be used across UK asset management.
Tokenisation, which involves representing an asset or ownership of an asset using distributed ledger technology (DLT), is viewed by the regulator as a way to reduce operational costs, improve efficiency and increase access to investment opportunities.
In its latest announcement, the FCA said it has worked closely with industry participants to develop the framework, with the aim of encouraging innovation while maintaining regulatory consistency across authorised fund structures.
“Tokenisation has the potential to play an important role in asset management, and its adoption will be driven by firms and investors,” said Simon Walls, Executive Director of Markets at the FCA.
“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.”
Direct‑to‑fund model changes how fund dealing works
The FCA’s guidance, published on 30 April as Policy Statement PS26/7, expands on the industry‑led “Blueprint” model and aims to give managers greater assurance around tokenised products.
The guidance covers several areas, including:
- DLT as primary books and records, allowing on‑chain ledgers to serve as the official record where firms can show resilience, governance and reconciliation controls.
- Support for public‑chain models, with expectations around access, validation and operational risk management.
- Flexibility for multi‑chain share classes, clarifying how managers can operate classes recorded on different networks.
- Operational expectations for digital cash tools, including how tokenised settlement assets can be used within existing rules.
- Use of DLT‑based operational infrastructure, provided firms meet FCA standards on resilience, auditability and oversight.
One of the most significant changes within the package is the introduction of an optional direct‑to‑fund (D2F) dealing model, which changes how authorised funds can handle subscriptions and redemptions.
Under this structure, investors can transact directly with the fund, which is an alternative to the traditional two‑step issuance process via the manager.
The FCA says this could improve settlement efficiency, reduce friction in dealing workflows and support atomic settlement as tokenised products evolve. While optional, the model is expected to become increasingly relevant as tokenised funds grow.
The financial watchdog has already received positive feedback, with John Allan, Director, Investment Association & IA Engine, describing the milestone as a “meaningful advance.”
“Working in collaboration with the investment management industry, the FCA has produced detailed guidance that provides confidence around public chain models where the right controls are in place, and the use of digital cash tools for operational needs,” he said.
Is the UK’s digital assets roadmap finally starting to deliver?
With the policy statement now published, the FCA’s focus turns to implementation, with the regulator planning to monitor how firms adopt tokenised fund structures through supervisory engagement rather than new reporting requirements.
Despite this appearing as a more hands-off approach, the watchdog has stressed that tokenised authorised funds must meet the same consumer‑protection standards as traditional structures.
Elsewhere, further work on digital money, including stablecoins and tokenised deposits, is expected later in the year as part of the UK’s digital assets roadmap.
While the roadmap is becoming more visible, questions are being asked about the UK’s pace relative to other markets.
The US, for example, is progressing with the GENIUS Act and already hosts the vast majority of global dollar‑backed stablecoin activity. Europe, meanwhile, is bedding in MiCA.
The UK appears to be transitioning from consultation to delivery, which is significant, but it also highlights how much ground still needs to be made up if it is to compete.
This was a major theme on the latest episode of The Payment Expert Podcast, where the team discussed the biggest announcements from UK FinTech Week, including the government’s plan to unify regulation for stablecoins, tokenised deposits and e‑money, and the FCA’s stance that no new rules are needed for agentic AI.
During the discussion, Editor Rachael Kennedy questioned whether the UK can credibly claim leadership on digital assets when key components of the regime will not arrive until 2027, and when other jurisdictions are already moving at speed.
