FCA's fund tokenisation framework paves to native onchain operating model

Financial Conduct Authority (FCA) releases fund tokenisation framework (PS26/7), signalling path towards FULLY ONCHAIN fund operating models. Key takeaways:

1️⃣ FCA Has Officially Greenlit Tokenised Authorised Funds

- Tokenised funds can operate within existing UK authorised fund frameworks. No bespoke regulatory regime is required to launch tokenised authorised funds.

- FCA is explicitly encouraging commercial adoption where demand exists.

👉 This materially reduces regulatory uncertainty for UK asset managers launching tokenised funds.

2️⃣ On-Chain Register Can Be the Primary Legal Record

- FCA confirmed the on-chain transaction ledger may serve as the primary books and records.

- Firms do not need to maintain full mirrored off-chain records if resiliency controls exist.

👉 This moves beyond “wrapper tokenisation” toward genuine operational tokenisation.

3️⃣ Public Blockchains Are Permitted

- FCA confirmed firms may use public / permissionless DLT networks (e.g. Ethereum) if controls are sufficient.

- Public blockchain usage is not prohibited nor treated as outsourcing.

👉 Major regulatory validation for public-chain institutional fund infrastructure.

4️⃣ New “Direct to Fund” (D2F) Dealing Model Introduced

- FCA introduces optional Direct to Fund model for all authorised funds.

- Investors transact directly with the fund rather than through manager box/intermediary processes.

- Enables single-stage issuance/redemption.

👉 This likely to accelerate fund tokenization in the UK and help fund managers take the client relationship back from wealth platforms.

5️⃣ Stablecoins / Digital Cash May Be Used for Fund Operations

FCA open to allowing stablecoins/digital cash for:

- Fund subscriptions/redemptions

- Distribution payments

- Settlement of underlying investments

- Gas / operational fees

👉 Removes barrier to fully tokenised portfolio construction as tokenized cash leg comes online.

Strategic Implications

This is one of the clearest regulatory endorsements globally of tokenised funds moving from pilot phase toward production-scale implementation with strategic implications for asset managers, infrastructure providers and market structure.

For Asset Managers

• UK becomes one of the most advanced jurisdictions for regulated fund tokenisation.

• Clear pathway now exists from pilot to production.

  
  

For Infrastructure Providers

• Regulatory bottleneck shifts from legal uncertainty to operational implementation.

• Winners likely include:

  • Fund admin/tokenisation middleware

  • Transfer agent / register tech providers

  • Digital cash / settlement infrastructure

  • On-chain compliance tooling

For Market Structure

• FCA is moving beyond permitting tokenised wrappers toward enabling native on-chain fund operating models.

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