UK Regulators Greenlight Tokenised Funds for Investment Managers
British investment managers recently gained approval to develop tokenised funds, a method that involves dividing assets into smaller tokens utilizing blockchain technology, according to the industry's trade body's announcement last week.
Tokenisation, also referred to as fractionalisation of funds, aims to simplify and increase transparency in trading fund assets, enabling investors to access a wider array of assets, as highlighted by industry advocates.
The Investment Association revealed that funds approved by Britain’s Financial Conduct Authority can now initiate the creation of tokenised funds, with the condition that these investments remain in mainstream assets and uphold existing valuation and settlement procedures.
Michelle Scrimgeour, CEO of Legal & General Investment Management, expressed, “The potential of fund tokenisation is immense in transforming our industry operations, fostering greater efficiency, liquidity, improved risk management, and the development of more tailored portfolios.”
Scrimgeour spearheads a collaborative working group with the FCA and Britain’s finance ministry, aiming to facilitate the integration of tokenised funds, with notable participants including BlackRock, M&G, and Schroders.
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Blockchain, the underlying technology in this initiative, acts as a digital ledger to document token ownership. Its primary utilization has been in cryptocurrencies, which remain a relatively small part of the global financial system.
Following Brexit, the UK is striving to bolster liquidity within its asset management sector by revising regulations.
In the United States, Europe, and Asia, investment managers and exchanges have already started exploring the potential of offering tokenised funds.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
