The United Kingdom is moving closer to a blockchain-driven investment landscape as the Financial Conduct Authority (FCA) considers allowing asset managers to tokenize their funds using public blockchains, such as Ethereum.
The initiative seeks to modernize fund management and make investing more accessible to a new generation of digital-native investors. By converting traditional investment products into blockchain-based tokens, asset managers could offer fractional ownership, faster settlement times, and increased transparency for fund participants.
“Tokenization has the potential to revolutionize the asset management sector,” said an FCA spokesperson. “We want to explore frameworks that maintain investor protection while enabling innovation and efficiency.”
Industry experts note that blockchain tokenized funds could reduce operational costs and streamline processes like fund reporting, compliance, and distribution. Additionally, investors could gain 24/7 access to fund tokens, trading them on secondary markets without waiting for traditional settlement windows.
Several UK asset managers have already begun pilot programs to test tokenized mutual funds and ETFs on Ethereum testnets, highlighting a growing appetite for digital-native investment solutions.
While the FCA has yet to finalize regulatory guidelines, this move signals the UK’s willingness to embrace blockchain technology as part of its broader strategy to remain competitive in the global financial services market.
If approved, tokenized funds could mark a major step in bridging traditional finance with the emerging decentralized finance (DeFi) ecosystem.
