Key Takeaways
- • The UK Financial Conduct Authority (FCA) finalised rules allowing approximately 2,600 asset managers controlling £16.5 trillion in assets to maintain official investor registers on blockchain, eliminating the requirement for off-chain duplicates while maintaining operational resilience and compliance standards.
- • The FCA introduced an optional Direct-to-Fund (D2F) dealing model that removes intermediaries from fund transactions, enabling the fund or its depositary to become the direct counterparty to investors with single-step execution and real-time unit issuance or cancellation.
- • The regulatory framework supports both public and private blockchain networks, including multi-chain deployments, provided investor rights and fee structures remain unchanged—building on an existing industry "Blueprint" model already used to approve the UK's first tokenised UCITS fund.
- • The rules take immediate effect under policy statement PS26/7 and represent a significant step toward mainstream tokenisation in asset management, with FCA Executive Director Simon Walls emphasizing the regulator's intent to provide "practical framework" confidence for firms implementing fund tokenisation.
Summary
The Financial Conduct Authority has completed a regulatory pathway for blockchain-native fund infrastructure, approving rules that allow UK asset managers to maintain investor registers directly on distributed ledger technology and introducing an intermediary-removing transaction model. The changes, formalized in policy statement PS26/7 and effective immediately, apply across approximately 2,600 firms managing £16.5 trillion in assets—representing a structural shift in how fund ownership and dealing can operate within existing regulatory frameworks.
The onchain register approval eliminates a significant friction point in tokenised fund operations. Previously, firms maintaining blockchain-based investor records were required to keep parallel off-chain duplicates as the official register of ownership. Under the new rules, the onchain record can serve as the primary register of investor ownership, provided firms maintain operational resilience, comply with governance standards, meet data protection requirements, and implement financial crime controls. This change applies to funds operating on public or private blockchains, including multi-chain deployments, as long as underlying investor rights and fee structures remain unaltered.
The Direct-to-Fund dealing model represents a second major structural innovation. In traditional fund transactions, investors interact through intermediaries (typically asset managers or distribution platforms), with multiple settlement steps and counterparty layers. Under the optional D2F model, the fund itself or its designated depositary becomes the counterparty to investor transactions. Cash moves directly from investor to fund, with units issued or cancelled in a single execution step—eliminating intermediary friction and settlement complexity while maintaining regulatory oversight through the depositary function.
The framework builds on earlier FCA work, including an industry-developed "Blueprint" model that already facilitated approval of the UK's first tokenised UCITS fund. Simon Walls, the FCA's Executive Director of Markets, stated that tokenisation would "play an important role in asset management" and highlighted the regulator's delivery of "a practical framework to give firms confidence in how fund tokenisation can operate within the FCA's rules." The immediate implementation of PS26/7 signals the FCA's intent to accelerate real-world deployment while maintaining prudential standards across the broader asset management ecosystem.
The onchain register approval eliminates a significant friction point in tokenised fund operations. Previously, firms maintaining blockchain-based investor records were required to keep parallel off-chain duplicates as the official register of ownership. Under the new rules, the onchain record can serve as the primary register of investor ownership, provided firms maintain operational resilience, comply with governance standards, meet data protection requirements, and implement financial crime controls. This change applies to funds operating on public or private blockchains, including multi-chain deployments, as long as underlying investor rights and fee structures remain unaltered.
The Direct-to-Fund dealing model represents a second major structural innovation. In traditional fund transactions, investors interact through intermediaries (typically asset managers or distribution platforms), with multiple settlement steps and counterparty layers. Under the optional D2F model, the fund itself or its designated depositary becomes the counterparty to investor transactions. Cash moves directly from investor to fund, with units issued or cancelled in a single execution step—eliminating intermediary friction and settlement complexity while maintaining regulatory oversight through the depositary function.
The framework builds on earlier FCA work, including an industry-developed "Blueprint" model that already facilitated approval of the UK's first tokenised UCITS fund. Simon Walls, the FCA's Executive Director of Markets, stated that tokenisation would "play an important role in asset management" and highlighted the regulator's delivery of "a practical framework to give firms confidence in how fund tokenisation can operate within the FCA's rules." The immediate implementation of PS26/7 signals the FCA's intent to accelerate real-world deployment while maintaining prudential standards across the broader asset management ecosystem.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.