The UK Investment Funds have granted approval for the tokenization of investment funds, aiming to harness blockchain technology in asset management.
The Investment Association, in collaboration with the UK Treasury and the Financial Conduct Authority (FCA), along with firms like BlackRock, has outlined a blueprint for implementation.
The model allows FCA-authorized funds to adopt tokenization for sales and redemptions, promoting efficiency and transparency. The framework ensures compliance with existing regulations, requiring portfolios to consist of mainstream assets and adhere to conventional valuation processes.
Michelle Scrimgeour, Chair of the Working Group, highlighted the transformative potential of fund tokenization, stating, “Fund tokenization has great potential to revolutionize how our industry operates, by enabling greater efficiency and liquidity, enhanced risk management and the creation of more bespoke portfolios.”
The move aligns with UK Finance Minister Jeremy Hunt’s plans to expand the digital assets sector through the Digital Securities Sandbox initiative, scheduled to commence in Q1, 2024, and Prime Minister Rishi Sunak’s vision to establish the UK as a web3 hub.
The initiative mirrors global efforts, with JPMorgan collaborating on a blockchain interoperability proof-of-concept for fund management under Singapore’s Project Guardian.
Also Read: UK Considers Outlawing Cold Calls for Crypto Investments
