The UK’s Financial Conduct Authority (FCA) has introduced new regulations that facilitate the integration of blockchain technology in fund management. This initiative is part of a broader strategy to enhance the efficiency of the asset management sector while maintaining existing investor protections.
Under the new rules, detailed in the policy statement PS26/7, asset managers can utilize distributed ledger technology (DLT) for maintaining investor records. The regulations confirm that on-chain transaction records can be utilized as primary books for unit deals without necessitating a separate off-chain record, as long as firms implement adequate resiliency measures.
Simon Walls, the FCA's executive director of markets, emphasized the significance of tokenization in asset management. The newly established framework aims to inspire confidence among firms regarding the operation of tokenized funds within the FCA’s regulatory structure. Furthermore, the FCA has already authorized the first tokenized UK undertakings for collective investment in transferable securities (UCITS), allowing these funds to maintain their registers on public DLT networks, provided they meet regulatory standards.