UK regulator approves blockchain use in funds

TLDR

The UK Financial Conduct Authority (FCA) has formally allowed regulated investment funds to use blockchain for core fund operations without needing experimental structures.

1. The FCAs PS26/7 rules let authorized UK funds run tokenized share registers on blockchain and even across multiple public chains, under the standard fund regime.
2. A new Direct to Fund model and roadmap toward tokenized assets and cash flows make it easier to run fund issuance and settlement natively onchain.
3. For crypto users, this strengthens the tokenization and stablecoin thesis in the UK, with real impact depending on which managers, blockchains and stablecoin models get adopted next.

Deep Dive

1. What The FCA Has Approved

The FCA has published policy statement PS26/7, confirming that authorized UK funds, including UCITS, can operate tokenized funds fully inside the existing authorized fund regime instead of separate sandboxes or pilots.

Under the industry Blueprint model, unitholder registers can sit entirely on distributed ledger technology, with onchain transaction records serving as the primary books and records if firms have robust resilience and backup plans in place. This is detailed in both the FCA?focused summaries from Cointelegraph and Finance Magnates, which note that a tokenized UCITS has already been authorized under this model.

Crucially, the FCA says registers may be kept on public blockchains, and units of a single share class can be recorded on multiple chains, as long as investor rights and fee structures are identical across all ledgers.

2. How It Changes Fund Plumbing

A key operational change is an optional Direct to Fund (D2F) dealing model, where the fund or its depositary, not the asset manager, is the counterparty to investor trades. Units are issued or cancelled directly against cash flows between investor and fund in a single step, which is naturally compatible with onchain settlement models.

This reduces reconciliation friction between legacy registrars and onchain ledgers and opens the door to near real time fund subscriptions and redemptions if supporting payment rails exist. At the same time, existing investor protection rules, governance, and AML controls remain in force, so this is not a relaxation but a migration of the plumbing onto DLT.

3. Roadmap, Stablecoins And Crypto Impact

The FCA explicitly frames this as the first step in a roadmap from tokenized funds toward tokenized assets and eventually tokenized cash flows, including scenarios where investors hold tokenized units in digital wallets and managers use smart contracts for portfolio management.

The regulator also signals openness to waivers so funds can use digital cash and stablecoins for settlement and certain expenses, ahead of a broader cryptoasset and stablecoin regime expected around October 2027, following a sterling stablecoin sandbox launched in 2026.

For crypto markets, the most direct beneficiaries are tokenization platforms, custodians and the chains that asset managers deem acceptable for regulated registers. The practical impact will depend on which large managers actually launch tokenized UCITS or OEICs, and whether they choose public networks like Ethereum or more permissioned setups.

Conclusion

The FCA has moved tokenized funds from the experimental edge into the core of UK fund regulation, keeping all the usual safeguards while letting the ledger go onchain. For crypto participants, this strengthens the long term case for tokenization, stablecoins and compliant DeFi rails, with the real opportunity emerging as major managers pick specific chains, stablecoin models and onchain workflows over the next few years.