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Tokenization Gets the Green Light? FCA Authorization, UK Investment Association Releases "UK Fund Tokenization" Implementation Plan

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Tokenization Gets the Green Light? FCA Authorization, UK Investment Association Releases "UK Fund Tokenization" Implementation Plan

According to the Investment Association, the UK announced on November 24 that, in close collaboration with the Treasury and the Financial Conduct Authority (FCA), it has officially released a detailed roadmap for the tokenization of UK funds, giving the green light to the tokenization of the UK fund industry.

UK Funds Tokenization Gets Green Light

The Investment Association in the UK has highlighted the "UK Fund Tokenisation" project aimed at enhancing efficiency, transparency, and competitiveness, with several key features:

  1. Investment management firms can adopt it immediately.

  2. It can operate within existing legal and regulatory frameworks.

  3. Provides valuation and settlement through the same process and timeframe.

  4. Utilizes Distributed Ledger Technology (DLT) for sales and redemptions.

  5. Funds must be established in the UK and authorized by the FCA, while adhering to traditional financial industry standards.

The report mentions that participants will be able to share real-time records to reduce fund management costs, simplify reconciliation processes, and shorten settlement times. The project is not limited to any specific type of company, product type, asset class, or customer base, but aims to provide integration opportunities for a wide range of enterprises.

Source: UK Fund Tokenisation

UK Financial Conduct Authority (FCA): Exploring Technology, Mitigating Risks

Sarah Pritchard, Director of Markets and Wholesale at the FCA, emphasized that while regulatory bodies are willing to explore innovative approaches for asset management companies, they must also be clear about potential risks:

We aim to support companies in implementing technological solutions that can strengthen the UK's asset management industry, but also address risks and potential harms.

In another announcement, the UK government reiterated its support for the "UK Fund Tokenisation" project:

The government strongly welcomes the "UK Fund Tokenisation" project, which will further drive related emerging technologies in asset management, demonstrating the UK's open attitude towards financial innovation.

Recent regulatory news in the UK seems to focus more on cryptocurrency firms rather than blockchain technology.

UK FCA Announces Marketing Guidelines for Crypto Companies, National Crime Agency Recruiting Cryptocurrency Investigators