UK regulator greenlights blockchain-based fund shares

TLDR

The UK's Financial Conduct Authority has approved rules letting regulated funds issue and record shares on blockchain within existing fund regimes, effectively greenlighting tokenized fund units.

1. The FCAs PS26/7 allows authorized funds, including UCITS, to keep investor registers on blockchain and use onchain records as primary books, within current investor protection rules.
2. A new optional Direct to Fund dealing model aligns fund share issuance and redemption with onchain settlement, making tokenized fund shares more operationally efficient.
3. The FCA roadmap points toward tokenized assets and cash flows next, including potential use of stablecoins and digital cash for settlement by around 2027.

Deep Dive

1. What The FCA Just Approved

The FCA has issued new rules and guidance in policy statement PS26/7 that let tokenized funds operate fully inside the existing UK authorized fund regime, rather than in test sandboxes. Reports note that authorized funds, including UCITS, can maintain unitholder registers on distributed ledger technology using the industry Blueprint model, with onchain transaction records allowed as the primary books for unit deals if resilience controls are in place. The guidance also permits registers on public blockchains and even a single share class recorded across multiple chains, as long as investor rights and fee structures stay identical across networks.

2. Why This Matters For Crypto Users

By blessing DLT registers and tokenized units inside mainstream fund rules, the FCA is lowering the friction for large asset managers to issue blockchain based fund shares that can move and settle onchain. Over time, these tokenized shares could be held in digital wallets, used as collateral in compliant environments, or integrated with tokenized Treasury and credit products that are already emerging on public chains. For crypto users, it strengthens the real world assets and tokenized funds narrative, especially around Ethereum and other networks used by institutional tokenization platforms, even if retail access will still be tightly regulated.

3. The Roadmap Toward Tokenized Cash

The FCA explicitly frames this as the first step in a roadmap from tokenized funds to tokenized assets and, eventually, tokenized cash flows. It signals openness to waivers so funds can use digital cash and stablecoins for settlement and expenses ahead of a broader cryptoasset and stablecoin regime expected around October 2027. Combined with a sterling stablecoin sandbox and wider UK crypto legislation, this points to a future where regulated fund units, underlying assets, and settlement money can all live onchain under a single supervisory umbrella.

Conclusion

The UK has effectively said that blockchain based fund shares belong inside its mainstream fund rulebook, not at the fringes. If asset managers adopt these tools at scale, tokenized funds and, later, tokenized assets and stablecoin settlement could become a core bridge between traditional portfolios and public blockchains, increasing the relevance of onchain infrastructure without changing the regulatory protections investors already rely on.