UK FCA Unveils Rules for Tokenized Funds, Allowing Public Blockchains for Fund Share Registers

The UK Financial Conduct Authority (FCA) on May 1 published new guidance for tokenized funds, allowing blockchain and distributed ledger technology (DLT) to be used for investor recordkeeping and fund share administration within the existing regulatory framework, a move aimed at accelerating onchain adoption in asset management. Under the updated approach, authorized funds may maintain investor registers on public blockchain networks if security and transparency standards are met. The rules also permit fund shares to be issued across multiple blockchains. The FCA introduced an optional "DirecttoFund (D2F)" model that would allow funds or custodians to transact directly with investors, with the goal of simplifying onchain settlement. The regulator said the framework has already supported approval of the UK's first UCITS tokenized fund. It added that upcoming work will examine the use of stablecoins, digital cash and smart contracts in fund settlement. The FCA plans to seek additional feedback on DLT applications in wholesale financial markets by 2026. The UK's broader cryptoasset regulatory regime is expected to be fully implemented by October 2027.