FCA issues fund tokenisation guidance for asset managers
01 May 2025 UK
Image: sebra/stock.adobe.com
The UK’s Financial Conduct Authority (FCA) has finalised its framework outlining how fund managers can facilitate direct-to-fund dealing and employ tokenised registers, coming into effect immediately.
The latest guidelines apply to firms when they adopt the new direct dealing model or start a tokenised authorised fund.
The regulatory body first laid out its guidance in an October 2025 consultation paper – which sought to support firms planning to initiate tokenised authorised funds in the UK using the industry-led ‘Blueprint’ model.
The FCA initially articulated its intention to build a plan for digital assets beginning in asset management in a January 2025 letter to the Prime Minister and in a 2025-30 strategy announcement.
The new roadmap describes a vision for how UK wholesale capital markets could adopt DLT and sets out approaches on supervisory principals.
The guidance also proposes rules for the introduction of a direct dealing model for authorised funds to encourage fund efficiency and assist tokenisation models.
This final policy statement includes an overview of the consultation’s feedback which it said received almost universal support towards its proposals.
Direct dealing model
Under the direct-to-fund model, known as ‘direct to fund’ (D2F), the fund or its depositary (as opposed to the authorised fund manager) functions as principal in unit deals with unitholders.
Respondents said that D2F would be useful for simplifying atomic settlement onchain for primary deals in authorised fund units, and is necessary for atomic settlement of new units.
The D2F also employs particular bank accounts to receive and facilitate payments to investors.
The FCA has stated that cash kept in a specific issue and cancellation account should be known as scheme property.
However the cash in the account is not declared “scheme property in registered form” for the purposes of the FCA registration of title rules such as COLL 6.6.12.R.
The FCA has reinforced its reconciliation requirements with authorised fund managers needing to have appropriate controls over the operation of the issue and cancellation account, this includes running reconciliations each day, or as regularly as the funds deals.
All money transferred into an omnibus account must be allocated quickly and not after five business days following receipt.
The FCA has suggested enabling firms to run omnibus issues and cancellation accounts for umbrella schemes, in line with compliance and legislation.
The FCA is doing ongoing work with HM Treasury to make clear how the rules apply to omnibus accounts.
The firms wanting to engage omnibus accounts to back direct dealing schemes will require legal advice evaluating that the proposed operating model adheres to appropriate laws on segregated liability.
The consultation also set out the FCA’s stance on the establishing of a wider tokenisation eco-system and alignment with the wider cryptoasset regime.
Tokenisation of authorised funds
The consultation set out guidance to back firms intending to function in a tokenised unitholder register.
Amendments made following the consultation paper include: enabling the on-chain record of transitions to be thought of as the primary books and records, and not needing firms to possess a duplicate ‘minor’ of onchain information.
Giving guidance that functionality to freeze or unfreeze or effect a forced transfer of tokens could engage to fix changes to a register.
Additionally it made clear that units in a given class may be issued on various blockchains provided conditions are attained.
Future of tokenisation
The FCA also set out next step recommendations for firms to explore tokenised portfolio management, and for composable finance to access benefits of the FCA’s open-door policy.
It also called for firms to tell regulators what existing initiatives they have, and how composable finance may sit within firms’ current blueprints.
The FCA emphasises that its digital asset plan includes work on a future view for how UK wholesale capital markets could take-up distributed ledger technology, involving its approach toward regulatory principles and red lines, and that composability is a potential area of this work, but it will ask firms for their approach later this year.
The latest guidelines apply to firms when they adopt the new direct dealing model or start a tokenised authorised fund.
The regulatory body first laid out its guidance in an October 2025 consultation paper – which sought to support firms planning to initiate tokenised authorised funds in the UK using the industry-led ‘Blueprint’ model.
The FCA initially articulated its intention to build a plan for digital assets beginning in asset management in a January 2025 letter to the Prime Minister and in a 2025-30 strategy announcement.
The new roadmap describes a vision for how UK wholesale capital markets could adopt DLT and sets out approaches on supervisory principals.
The guidance also proposes rules for the introduction of a direct dealing model for authorised funds to encourage fund efficiency and assist tokenisation models.
This final policy statement includes an overview of the consultation’s feedback which it said received almost universal support towards its proposals.
Direct dealing model
Under the direct-to-fund model, known as ‘direct to fund’ (D2F), the fund or its depositary (as opposed to the authorised fund manager) functions as principal in unit deals with unitholders.
Respondents said that D2F would be useful for simplifying atomic settlement onchain for primary deals in authorised fund units, and is necessary for atomic settlement of new units.
The D2F also employs particular bank accounts to receive and facilitate payments to investors.
The FCA has stated that cash kept in a specific issue and cancellation account should be known as scheme property.
However the cash in the account is not declared “scheme property in registered form” for the purposes of the FCA registration of title rules such as COLL 6.6.12.R.
The FCA has reinforced its reconciliation requirements with authorised fund managers needing to have appropriate controls over the operation of the issue and cancellation account, this includes running reconciliations each day, or as regularly as the funds deals.
All money transferred into an omnibus account must be allocated quickly and not after five business days following receipt.
The FCA has suggested enabling firms to run omnibus issues and cancellation accounts for umbrella schemes, in line with compliance and legislation.
The FCA is doing ongoing work with HM Treasury to make clear how the rules apply to omnibus accounts.
The firms wanting to engage omnibus accounts to back direct dealing schemes will require legal advice evaluating that the proposed operating model adheres to appropriate laws on segregated liability.
The consultation also set out the FCA’s stance on the establishing of a wider tokenisation eco-system and alignment with the wider cryptoasset regime.
Tokenisation of authorised funds
The consultation set out guidance to back firms intending to function in a tokenised unitholder register.
Amendments made following the consultation paper include: enabling the on-chain record of transitions to be thought of as the primary books and records, and not needing firms to possess a duplicate ‘minor’ of onchain information.
Giving guidance that functionality to freeze or unfreeze or effect a forced transfer of tokens could engage to fix changes to a register.
Additionally it made clear that units in a given class may be issued on various blockchains provided conditions are attained.
Future of tokenisation
The FCA also set out next step recommendations for firms to explore tokenised portfolio management, and for composable finance to access benefits of the FCA’s open-door policy.
It also called for firms to tell regulators what existing initiatives they have, and how composable finance may sit within firms’ current blueprints.
The FCA emphasises that its digital asset plan includes work on a future view for how UK wholesale capital markets could take-up distributed ledger technology, involving its approach toward regulatory principles and red lines, and that composability is a potential area of this work, but it will ask firms for their approach later this year.
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