The UK’s Financial Conduct Authority (FCA) has unveiled a roadmap to help asset managers adopt blockchain technology for funds tokenization.
In an announcement on Tuesday, the regulator said the initiative aims to “provide businesses with greater clarity” to adopt tokenization and “drive innovation and growth in asset management.”
“Tokenization has the potential to drive fundamental changes to asset management, with benefits for the industry and consumers,” said Simon Walls, executive director of markets at the FCA. “There are many things businesses can do under our existing rules and many more are becoming possible through the changes we are proposing to adopt now,” he added.
According to the FCA, tokenized products can increase competition, reduce costs and expand access to investments, particularly to private markets and infrastructure. By digitizing fund operations, asset managers could also reduce data reconciliation and sharing costs.
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FCA presents roadmap for tokenized funds
The plan includes guidance for operating tokenized fund registries under existing rules via the UK Blueprint model, a simplified trading framework for processing traditional and tokenized fund units and a roadmap for blockchain-based settlement.
The FCA also intends to explore how regulation may need to evolve as tokenization becomes more widespread. “The UK has the opportunity to be a global leader here and we want to provide asset managers with the clarity and confidence they need,” Walls said.
Last month, Coinbase asked users to support a public petition calling on the UK to develop an innovation-friendly strategy for blockchain and stablecoins. The petition called for a framework including regulation of stablecoin and tokenization, adoption of blockchain, and the appointment of a blockchain “czar.”
Related: BNY Considers Blockchain for Real-Time Tokenized Payments
UK faces criticism over its crypto policy
The UK’s approach to crypto regulation has drawn criticism from industry players. In June, analysts at the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank, warned that Britain had squandered its lead in distributed ledger finance.
In July, Coinbase also released a satirical video titled “Everything is Fine,” targeting the British financial system. The images used lyrics and music that touted the country’s strong finances while depicting scenes of inflation, poverty and financial hardship.
The pressure from the industry appears to have paid off. Last week, the FCA lifted its 2019 ban on crypto exchange-traded notes (ETNs) for retail investors, allowing trading on FCA-approved UK exchanges.
Additionally, the Bank of England is reportedly easing proposed limits on companies’ stablecoin holdings, considering exemptions for companies needing larger reserves backed by trust funds.
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