UK funds get green light for tokenization development
UK authorized funds can now develop and implement token models. The green light comes after the government's asset management task force's technology working group published its report on UK fund tokens. HM Treasury and the Financial Conduct Authority (FCA) collaborated on the initiative.
A UK investment fund has been licensed to develop tokenisation, the development comes after a government task force on asset management was set up earlier this year.
The announcement follows the release of a report on tokenization by the Government Asset Management Task Force's Technology Working Group, according to the Investment Association (IA) in a press release.
As part of the industry, the ‘UK Funds Tokenisation – Blueprint for Implementation' report includes input from HM Treasury and the Financial Conduct Authority (FCA) and provides a roadmap for the use of distributed ledger technology (DLT) for fund tokens. UK
A milestone in the UK fund industry
Allowing tokenised funds to accept DLT in their operations, from sales to redemptions, has the potential to open up the industry to further growth, said Working Group Chair and CEO of Legal and General Investment Management Michelle Scrimgeour in a statement.
“Today marks a significant milestone for the adoption of tokens in the UK funds industry. Fund tokenization has the potential to transform how our industry operates by enabling greater efficiency and liquidity, improved risk management and more transparent portfolios, added Scrimgeour.
The FCA said it welcomed the working group's report, which it said would set guidelines on the adoption of token models within the current UK legal and regulatory framework.
Sarah Pritchard, the FCA's chief executive of markets and global, said: “We welcome the report today, which identifies a path forward and concludes that there are no significant regulatory barriers to using the proposed baseline model.
UK support for innovation
Today's announcement comes a day after UK Finance Minister Jeremy Hunt proposed legislation for the country's digital securities sandbox. As reported by CoinJournal, the initiative aims to promote the use of digital assets in financial markets.
This initiative adds to the FCA's recently announced digital sandbox for early-stage digital asset firms.
There is also clarity on Stablecoin regulation with the adoption of a key market law that recognizes crypto trading as a regulated activity. As other developments come into the picture, the developments the industry is seeing are consistent with the UK's efforts to become a global hub for blockchain and Web3 innovation.
