- UK-approved funds can now develop and implement tokenization models.
- The approval comes after the Government Asset Management Taskforce’s Technical Working Group published a report on UK fund tokenization.
- The UK Treasury and the Financial Conduct Authority (FCA) collaborated on the scheme.
UK investment funds have received approval to develop tokenization following the establishment of a government task force on asset management earlier this year.
The announcement follows the release of a report on tokenization by the Government Asset Management Task Force’s Technical Working Group, the Investment Association said in a press release.
According to the industry, ‘Tokenizing UK Funds – A Blueprint for Implementation‘The report includes input from the Treasury and the Financial Conduct Authority (FCA) and provides a roadmap for the use of distributed ledger technology (DLT) for fund tokenization in the UK.
A milestone in the UK fund industry
Michelle Scrimgeour, practice group chair and CEO of Legal & General Investment Management, said in a statement that allowing tokenized funds to adopt DLT in their operations, from sales to redemptions, will help the industry He stated that there is potential for further growth.
“Today marks a milestone in the implementation of tokenization within the UK funds industry. Fund tokenization has great potential to transform the way the industry operates by improving efficiency and liquidity, enhancing risk management, and creating customized portfolios,” added Scrimgeour.
FCA said illusion The working group’s report states that it sets out guidance for the adoption of tokenization models within the UK’s current legal and regulatory framework.
Sarah Pritchard, managing director of markets and international at the FCA, said: “We welcome the report today which confirms the way forward for tokenization and concludes that there are no significant regulatory barriers to adoption of the proposed underlying model.”
Supporting UK innovation
Today’s announcement comes a day after UK Chancellor of the Exchequer Jeremy Hunt proposed legislation for a digital securities sandbox in the UK. As highlighted by CoinJournal, the initiative aims to promote the use of digital assets in financial markets.
This initiative is in addition to the recently outlined digital sandbox that the FCA envisions for early-stage digital asset firms.
Stablecoin regulation has become clearer with the passage of major market laws recognizing cryptocurrency trading as a regulated activity. As other developments emerge, the industry sees milestones that align with the UK’s quest to become a global hub for blockchain and web3 innovation.