Britain’s financial watchdog unveils $19tn plan to make UK ‘world leader’ in tokenisation

The United Kingdom is betting big on tokenisation.

In a major policy step, the Financial Conduct Authority, Britain’s financial watchdog, outlined plans to support tokenisation in the country’s nearly $19 trillion asset management industry.

The FCA described the move as a key move toward driving innovation and maintaining Britain’s global financial edge.

“Tokenisation has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers,” said Simon Walls, the FCA’s executive director of markets.

The UK is ready to be a “world leader,” Walls added.

The proposals include new guidance for fund tokenisation, an alternative dealing model for trading tokenised units, and a roadmap for future rule changes that would allow asset managers to settle transactions directly on public blockchains.

Attracting new investors

The FCA’s plan marks a decisive step toward integrating distributed ledger technology into mainstream financial markets.

Tokenisation – the process of recording ownership of assets on a blockchain – could lower fund administration costs, improve transparency, and open up access to private markets, the FCA said.

The regulator’s proposals include guidance for firms on operating tokenised fund registers under existing FCA rules, a streamlined model for buying and selling units in both traditional and tokenised funds, and a roadmap to address key barriers such as using public blockchains and settling transactions entirely onchain.

The FCA added that tokenisation will “open up new ways to distribute funds, including to those new to investing,” and “ultimately help consumers access more cost-effective and personalised investments.”

The watchdog also said the technology offers opportunities to “improve efficiencies and reduce the costs of fund management,” for example, by cutting the expense of sharing and reconciling data between firms that operate or distribute funds.

Crypto across the pond

The move comes as the FCA and the UK government look to accelerate digital finance policy, following the establishment of the Transatlantic Taskforce for Markets of the Future with the US earlier this month.

That taskforce will coordinate on digital assets, tokenisation, and market innovation, as London seeks to attract more blockchain-based financial activity.

Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email lance@dlnews.com.