UK FCA Issues New Regulations for Tokenized Funds, Allowing Public Funds to Issue Shares on Public Blockchains

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On May 1, the UK’s Financial Conduct Authority (FCA) released new regulations for the supervision of tokenized funds, allowing funds to utilize blockchain and distributed ledger technology (DLT) for investor record-keeping and share management within the existing regulatory framework, promoting the on-chain transformation of the asset management industry. According to the new regulations, authorized funds can deploy investor registers on public blockchain networks, provided they meet security and transparency requirements, and allow fund shares to be issued across multiple blockchains. The FCA also introduced an optional ‘Direct-to-Fund (D2F)’ model, enabling funds or custodians to transact directly with investors to streamline on-chain settlement processes. The FCA stated that these rules have supported the approval of the first UK UCITS tokenized fund, and will explore the application of stablecoins, digital cash, and smart contracts in fund settlements in the future, with plans to further consult on the use of DLT in wholesale financial markets by 2026. The complete regulatory framework for crypto assets in the UK is expected to be implemented by October 2027.

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