The FCA has launched a consultation on new rules for fund tokenisation and direct-to-fund dealing.

The UK regulator said it wants to give firms more clarity and confidence to adopt tokenisation – a method of digitally representing an asset or its ownership by recording it using distributed ledger technology – in fund management, which it views as a key driver of future financial services.

Proposals in the consultation include:

  • Guidance on operating tokenised fund registers under current FCA rules through the UK blueprint model.
  • A streamlined, alternative dealing model for fund managers to process buying and selling of units in authorised funds, whether traditional or tokenised.
  • A roadmap to advance fund tokenisation and address key barriers like using public blockchains and settling transactions entirely on the blockchain.
  • A discussion on how tokenisation models could evolve and how regulation may need to change.

Simon Walls, executive director of markets at the FCA, said: “Tokenisation has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers.

“There are many things that firms can do under our existing rules and more that become possible with the changes we propose enacting now.

“We stand ready to design the next stage with the industry – this publication suggests a path. The UK has the opportunity to be a world-leader here and we want to provide asset managers with the clarity and confidence they need to deliver.”

There are two deadlines for feedback on CP25/28 ‘Progressing Fund Tokenisation’, the first is 21 November for the FCA’s proposals while the second is 12 December for feedback on future tokenisation models.

The FCA plans to publish a policy statement with the final regulatory requirements in the first half of 2026.

John Allan, head of the innovation and operations unit at the Investment Association, said the consultation paper has the potential to accelerate tokenisation and efficiency in the UK fund market.

“The IA has a track record of championing innovation through tokenisation to benefit investors.

“The FCA’s proposals – embracing public chains, the use of stablecoin, and introducing Direct2Fund – signal a clear shift in thinking and confirms its stance as a tech positive, innovation-supporting regulator.

“We look forward to continuing the co-creation of a tokenisation regulatory framework with FCA for a new version of the fund – Investment Fund 3.0 – that is customer focused and able to adapt to future developments in digital markets."

Jesse Knutson, head of operations at Bitfinex Securities, a regulated platform that enables entities to raise capital through the listing of tokenised securities, also welcomed the consultation paper, calling the transition to tokenisation “a generational opportunity for the asset management industry”.

“Tokenisation will enable managers to raise capital at lower costs and access a deeper and wider pool of investors, all while retaining stringent due diligence requirements.

“Tokenisation sets a lower barrier to entry for would-be investors. Many investors can participate in fundraises that would previously only be available to institutional investors. It democratises access to capital, which is not only transformative for investors but also institutions and managers."