The UK Financial Conduct Authority (FCA) has issued new rules and guidance aimed at facilitating the integration of blockchain technology into traditional asset management structures. In a policy statement issued on Thursday, titled PS26/7, the Authority set out how tokenized funds can be incorporated within the current regulatory framework for funds, going beyond experimental regimes and allowing blockchain to operate under accepted market standards. These changes represent an important step toward modernizing the financial infrastructure and improving fund management efficiency. Tokenization technology and Distributed Ledger Technology (DLT) have the potential to revolutionize the sector by simplifying record-keeping and enhancing transparency. The Authority also said it is committed to supporting innovation in the UK asset management sector, making it easier for firms to integrate blockchain into their operations without abandoning investor protection standards. This approach forms part of a broader initiative set out in the UK’s Digital Assets Roadmap, first presented in a letter to the Prime Minister in January 2025.

How does this affect asset managers and tokenized funds?

Under the new framework, firms are now allowed to run investors’ records on Distributed Ledger Technology (DLT) systems, using the standard “scheme” model in this industry. This enables the use of transaction records on the blockchain as the core records for unit transactions without the need for a duplicate copy outside the blockchain, provided that firms apply “appropriate flexibility plans.” The scheme has already been used successfully to authorize the first tokenized collective investment scheme (UCITS) in the UK, a foundational structure for mutual funds. Most importantly, authorized tokenized funds will now be able to keep their records on public DLT networks, provided they meet the FCA-required standards for security and transparency. This means funds can issue units across multiple blockchains while maintaining investors’ rights and consistent fee structures.

Simon Wool, the FCA’s Executive Director of Markets, stated this.