The Financial Conduct Authority (FCA), the UK’s financial services regulator, has published new guidance designed to make it easier for asset managers to adopt fund tokenisation.
The guidance clarifies how firms may deploy distributed ledger technology (DLT) within the regulator’s existing rules, while new rules are also being introduced to streamline fund dealing processes. Central to these changes is an optional Direct to Fund (D2F) model, which allows investors to transact directly with a fund — whether it operates on a traditional or tokenised basis.
Tokenisation involves recording an asset, or ownership of that asset, on a distributed ledger. The FCA notes it carries the potential to reduce costs and broaden access to investment opportunities for a wider pool of people. The regulator developed the guidance and associated rules in close partnership with the industry, with the stated aim of fostering innovation and driving greater operational efficiency for asset managers.
The UK holds a prominent position in global asset management, with approximately 2,600 firms collectively overseeing £16.5 trillion in assets on behalf of domestic and international clients. Supporting growth and innovation within the sector forms a central pillar of the FCA’s strategy for 2025 to 2030. The guidance also forms part of the FCA’s broader digital assets roadmap, which outlines how fund tokenisation may evolve over time.
FCA executive director of markets Simon Walls said, ‘Tokenisation has the potential to play an important role in asset management, and its adoption will be driven by firms and investors. 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.’
Investment Association director, innovation and operations unit and director, Engine John Allan said, ‘This milestone represents a meaningful advance in the UK’s approach to innovating funds market infrastructure. 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. Alongside wider work on wholesale digital market infrastructure, this guidance and the increased optionality provided by D2F gives firms a stronger foundation to align innovation ambitions with long term operating choices.’
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