The UK’s Financial Conduct Authority (FCA) has unveiled new plans to support the use of tokenisation in asset management, setting out a framework designed to promote efficiency and innovation across the sector.
The regulator is working with the Technology Working Group of the government’s Asset Management Taskforce to explore how distributed ledger technology (DLT) could modernise fund operations and unlock new investment opportunities, according to its consultation paper Progressing fund tokenisation.
According to the FCA, tokenisation – the process of issuing digital tokens representing fund units or underlying assets – has the potential to make fund management “more efficient, more transparent and more accessible to investors”.
It said the next phase of its work would focus on ensuring that existing rules and regulatory processes can accommodate the adoption of tokenised funds.
Sarah Pritchard, executive director for markets and international at the FCA, said: “We are supporting firms to safely explore the potential of new technologies like tokenisation, while making sure investors remain protected. The UK is well placed to take advantage of the opportunities these innovations present.”
The regulator added that its “early engagement” with industry stakeholders had revealed strong interest in developing tokenised fund models, and that it expected to work closely with the sector to “remove barriers and clarify expectations”.
Industry observers have described the FCA’s move as both significant and overdue.
Allan Trimmer, head of alternatives product at Aberdeen, said: “As an early adopter of tokenisation […] Aberdeen is hugely supportive of the FCA’s intention to add clarity to the use of fund tokenisation helping support innovation while protecting consumers.”
He added: “The consultation covers a number of areas that are critical to maintaining progress around tokenisation within asset management, including the need for standardisation around the issuance and use of tokens, exploring the use of stable coins to drive greater speed and efficiency of transactions and examining the forward looking stages of tokenisation which have the potential to shape the end-to-end Investment Management lifecycle of the future.”
Alistair Shipp, executive director, wealth management and private banking, at management and technology consultancy Capco, said: “The FCA’s move to set out formal plans and guidance on tokenisation marks a significant – and, many would argue, overdue – step for the UK’s asset and wealth management industries.”
Shipp said that a clear regulatory framework would “instil confidence to invest in new infrastructure and processes, paving the way for more streamlined operations, reduced costs and access to stored value across a wider range of asset classes”.
However, he warned that implementing tokenisation “will demand significant investment from across the market” and added that the UK and Europe have been “slower to move on tokenisation compared to Japan, Singapore and Hong Kong”.
“With the FCA’s proposals now providing a clearer path forward, the next step for firms should be evaluating whether to build standalone systems or integrate tokenisation into existing technology frameworks,” Shipp said.
The FCA is seeking industry feedback by 21 November 2025.
