The Financial Conduct Authority (FCA) of the United Kingdom has unveiled a strategy to assist asset managers in embracing blockchain technology for fund tokenization.
In a Tuesday announcement, the regulator stated that this initiative seeks to “offer firms enhanced clarity” for tokenization adoption and to “foster innovation and growth in asset management.”
“Tokenization has the capacity to instigate significant changes in asset management, presenting advantages for both the industry and consumers,” remarked Simon Walls, the FCA’s executive director of markets. “Numerous actions are feasible for firms under our current regulations, along with additional possibilities that would arise from the changes we suggest implementing now,” he continued.
As per the FCA, tokenized products can enhance competition, minimize costs, and expand investment access, especially to private markets and infrastructure. By digitizing fund operations, asset managers could also decrease reconciliation and data-sharing expenses.
Related: Tokenization requires safeguards, not solely innovation
FCA details strategy for tokenized funds
This strategy encompasses guidance for managing tokenized fund registers according to current regulations via the UK Blueprint model, a streamlined dealing framework for handling both traditional and tokenized fund units, and a plan for blockchain-based settlement.
The FCA also plans to investigate how regulations might need to adapt as tokenization gains traction. “The UK has the chance to emerge as a global leader in this area, and we aim to provide asset managers with the clarity and assurance necessary for success,” Walls stated.
Last month, Coinbase urged users to back a public petition advocating for the UK to devise a pro-innovation strategy surrounding blockchain and stablecoins. The petition called for a framework that includes stablecoin and tokenization regulation, blockchain adoption, and the designation of a blockchain “czar.”
Related: BNY anticipates blockchain for real-time tokenized payments
UK criticized for crypto policy
In July, Coinbase released a satirical video titled “Everything is Fine,” critiquing the financial system in Britain. The video featured lyrics and music boasting about the country’s robust finances while showcasing scenes of inflation, poverty, and financial distress.
The pressure from the industry seems to have yielded results. Last week, the FCA lifted its 2019 prohibition on crypto exchange-traded notes (ETNs) for retail investors, permitting trading on FCA-sanctioned, UK-based exchanges.
Moreover, the Bank of England is reportedly reconsidering proposed restrictions on corporate stablecoin holdings, contemplating exemptions for firms requiring larger fiat-backed reserves.
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