FCA Sets Out Plans to Support Tokenization

The UK’s financial watchdog, the Financial Conduct Authority (FCA), has outlined proposals aimed at supporting tokenization within the UK as part of efforts to promote innovation and growth in the country.

The regulator’s plans include providing additional guidance to help firms adopt tokenization, the digital representation of assets using distributed ledger technology, more confidently under existing rules.

Simon Walls, executive director of markets at the FCA, said:  “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.”

Among the proposals are guidance on operating tokenized fund registers through the UK’s “Blueprint” model, as well as the introduction of a streamlined dealing model to simplify how units in authorized funds are bought and sold.

The FCA also set out a roadmap to address barriers to broader adoption, including the use of public blockchains and the full settlement of transactions on-chain.

The FCA said it will also open a wider discussion on how tokenization models could evolve and whether regulation may need to adapt to support future developments.

The regulator believes tokenization could increase competition and consumer choice by enabling new ways to distribute funds, including to first-time investors.

It could also broaden access to private markets and infrastructure opportunities, offering investors more tailored and cost-effective products.

Beyond expanding access, tokenization could improve operational efficiency across the financial services ecosystem by cutting the cost of data reconciliation and fund administration. The FCA said it is continuing to work closely with the industry to ensure the UK remains at the forefront of financial innovation.