The UK Financial Conduct Authority (FCA) has approved new rules allowing tokenized funds to operate fully within the existing approved funds regime, rather than separate pilot structures.
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The changes give asset managers a clearer path to keeping records of funds blockchain and using an optional direct-to-fund (D2F) dealing model, while maintaining existing investor protection standards.
Onchain Fund is registered under the scheme model
In policy statement PS26/7, Financial Supervision Authority It confirms that authorized funds can run their unitholder records on distributed ledger technology using an industry-specific “schema” model.
Onchain transaction records may serve as the primary ledgers and records for unit transactions, and companies do not need a complete off-chain mirror if they maintain appropriate operational resilience plans.
The guidance applies to UCITS and other approved funds and allows registries to sit on public DLT networks if companies meet the regulator’s expectations on governance, data privacy and financial crime controls. Units in a single share class can be registered across multiple blockchains as long as investor rights and fee structure remain the same.
Direct-to-box transaction model to support tokenization
The main rule change is the introduction of an optional direct-to-fund dealing model, which changes how contributions and redemptions are processed. Under D2F, the fund or its depositary, rather than the asset manager, becomes the counterparty to investors’ trades, so units are issued or canceled directly against cash flows between investors and the fund in one step.
The Financial Conduct Authority (FCA) says this would make processes more efficient and easier to comply with or shorten onchain. colony Courses. Following industry feedback, the regulator will still allow managers to deal as managers in fund units using D2F and combine different dealing models within an overall structure.
Looking to the future, the FCA sets out a roadmap from tokenized funds to tokenized assets and ultimately tokenized cash flows, including models in which investors hold tokenized assets in digital wallets and managers use smart contracts to manage the portfolios.
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It also signals openness to concessions that would allow funds to use digital cash and stablecoins for settlement and certain expenses, before broader crypto assets. Stablecoin system It is scheduled to enter into force in October 2027.
The FCA’s journey towards approving tokenized funds began in 2023, when it collaborated with industry groups to publish a UK model scheme outlining how firms could operate tokenized unitholder registers within existing legal frameworks.
In parallel with this tokenization roadmap, the Financial Conduct Authority (FCA) is developing a comprehensive regulatory regime for crypto assets starting with legislation passed in February 2026. It launched a sterling stablecoin sandbox in March 2026, and will open applications for a corporate license in September before the full regime comes into force next year.
This article was written by Jared Kirroy at www.financemagnates.com.
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