The FCA has announced new plans to support the adoption of tokenisation in the asset management industry, as part of its broader mission to encourage innovation and maintain the UK’s global competitiveness in financial services.
The initiative aims to provide firms with greater clarity on how to adopt tokenisation technologies, enabling them to innovate and drive growth across the sector. The regulator believes tokenisation can deliver significant benefits, including improved efficiency, reduced costs, and enhanced competition in fund management.
The FCA plays a critical role in shaping and overseeing the UK’s asset management landscape, which includes around 2,600 firms managing approximately £14tn in assets for both domestic and international clients. The regulator’s efforts are aligned with its strategic commitment to supporting technological innovation that can help financial markets operate more effectively and inclusively.
Tokenisation — the process of digitally representing assets using distributed ledger technology — is expected to revolutionise the way investments are created, distributed, and managed. The FCA sees this as an opportunity to make fund operations more transparent and efficient, while also broadening access to investments in private markets and infrastructure projects. This could ultimately make investing more cost-effective and personalised for consumers.
In addition to driving innovation, tokenisation could significantly cut operational expenses by simplifying how data is shared and reconciled between the various entities involved in fund distribution and management. The FCA has been actively collaborating with industry participants to explore these benefits and identify best practices for implementation.
As part of its newly published plans, the FCA proposed several measures, including guidance for operating tokenised fund registers under its existing framework via the UK Blueprint model, an alternative model for dealing in both traditional and tokenised funds, and a roadmap to address challenges such as settling transactions on public blockchains. The publication also opens a discussion about how tokenisation models may evolve and what future regulatory changes could be necessary.
FCA executive director of markets Simon Walls 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.”
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