The United Kingdom’s Financial Conduct Authority (FCA) has approved new rules and guidance for tokenized funds, signaling a shift toward integrating blockchain technology into mainstream asset management. The regulator outlined its stance in a policy statement, PS26/7, released on Thursday.
The FCA said tokenization and distributed ledger technology (DLT) could improve efficiency in fund management. It wants to support innovation in the UK’s asset management sector, as part of a broader digital assets roadmap first detailed in a January 2025 letter to the prime minister.
These changes give firms a clearer path to use blockchain within regulated fund operations. Policymakers aim to modernize market infrastructure without altering existing investor protection rules. The move reflects a broader effort to bring tokenized finance into the existing regulatory framework, rather than allowing it to develop separately.
Simon Walls, executive director of markets at the FCA, said tokenization would “play an important role in asset management.” He noted that the regulator had provided a practical framework to give firms confidence in how fund tokenization can operate within FCA rules.
How tokenized funds move into the UK rulebook
The policy statement, PS26/7, allows firms to run investor records on DLT using an industry-developed “Blueprint” model. It confirms that onchain transaction records can serve as the primary books for unit deals, without needing a full off-chain duplicate, as long as appropriate resiliency plans are in place.
The FCA said the Blueprint has already been used to authorize the first tokenized UK undertakings for collective investment in transferable securities (UCITS). Authorized funds can maintain their register on public DLT networks if controls meet the regulator’s standards. This includes issuing units across multiple blockchains, provided investors’ rights and charges remain consistent.
The main rule change introduces an optional “Direct-to-Fund” (D2F) dealing model. In this structure, the fund or its depositary, rather than the manager, acts as the counterparty to investor trades. Deals go through a single step where units are issued or canceled directly against cash moving between investors and the fund. The FCA says this makes fund operations more efficient and easier to align with onchain settlement.
Roadmap for the future
Looking ahead, the FCA sketched a roadmap that moves from today’s tokenized funds to tokenized assets and eventually tokenized cash flows. This includes models where investors hold tokenized assets in digital wallets and managers use smart contracts to manage them.
The regulator said it remains open to granting waivers so funds can use digital cash and stablecoins for settlement and certain expenses. It plans to seek further views in 2026 on wider use of DLT in wholesale markets.
The policy statement comes after the FCA opened a consultation on guidance for its wider cryptoasset regime earlier this month. That consultation covers stablecoin issuance, trading, custody and staking, ahead of a full framework due to take effect in October 2027.
Cointelegraph reached out to the FCA for comment but had not received a response by publication.
