The Financial Conduct Authority (FCA) in the United Kingdom has announced a plan to assist asset managers in integrating blockchain technology for fund tokenization.
In a Tuesday release, the authority indicated that the initiative seeks to “offer firms further clarity” for adopting tokenization and “foster innovation and growth in asset management.”
“Tokenization can facilitate significant transformations in asset management, providing advantages for both the industry and consumers,” stated Simon Walls, FCA’s executive director of markets. “There are numerous actions firms can undertake under our current regulations, along with many new possibilities arising from the changes we are proposing,” he continued.
The FCA highlighted that tokenized products could enhance competition, decrease costs, and expand investment opportunities, especially in private markets and infrastructure. By digitizing fund operations, asset managers could also reduce costs related to reconciliation and data-sharing.
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FCA’s plan for tokenized funds
The initiative includes guidance for managing tokenized fund registers using the existing regulations through the UK Blueprint model, a streamlined framework for handling both traditional and tokenized fund units, and a plan for blockchain-based settlement.
The FCA also aims to investigate how regulations might need to adapt as tokenization gains traction. “The UK has the potential to lead globally, and we want to equip asset managers with the clarity and confidence necessary to succeed,” Walls remarked.
Recently, Coinbase encouraged its users to support a public petition urging the UK to establish a pro-innovation strategy for blockchain and stablecoins. The petition advocated for a framework that includes stablecoin and tokenization regulations, blockchain adoption, and the appointment of a blockchain “czar.”
Related: BNY explores blockchain for real-time tokenized payments
UK criticized over crypto regulation
In July, Coinbase released a satirical video titled “Everything is Fine,” critiquing the UK’s financial system. The video featured lyrics and music celebrating the country’s robust finances while portraying scenes of inflation, poverty, and financial hardship.
Industry pressure seems to have yielded results. Last week, the FCA lifted its 2019 ban on crypto exchange-traded notes (ETNs) for retail investors, permitting trading on FCA-approved, UK-based exchanges.
Moreover, the Bank of England is reportedly relaxing its proposed limits on corporate stablecoin holdings, exploring exemptions for firms requiring larger fiat-backed reserves.
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