The UK's FCA Releases Tokenization Fund Regulations, Allowing Open-Ended Funds to Issue Shares on Public Blockchain

On May 1, the UK’s Financial Conduct Authority (FCA) rolled out new rules for tokenized funds, letting funds use blockchain and distributed ledger technology (DLT) to keep investor records and manage shares under the existing regulatory framework—pushing the digitization of the asset management sector. Under the new rules, authorized funds can host investor registers on public blockchain networks (as long as they meet security and transparency standards) and issue fund shares across multiple blockchains. The FCA also launched the optional “Direct-to-Fund (D2F)” model, letting funds or custodians transact directly with investors to simplify on-chain settlement. The FCA noted the rules have already helped approve the UK’s first tokenized UCITS fund and will further explore how stablecoins, digital cash, and smart contracts can be used in fund settlements. It plans to gather additional feedback on DLT’s use in wholesale financial markets by 2026. The UK’s full crypto asset regulatory framework is set to be finalized by October 2027.