The UK’s Financial Conduct Authority (FCA) has approved new rules that allow tokenized funds to operate fully within the existing authorized fund regime, rather than in separate experimental structures.

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The changes give asset managers a clearer route to keep fund registers on blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term and to use an optional Direct‑to‑Fund (D2F) dealing model, while keeping current investor protection standards in place.

Onchain Fund Registers Under the Blueprint Model

In Policy Statement PS26/7, the FCA confirms that authorized funds can run their unitholder registers on distributed ledger technology using the industry “Blueprint” model.

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Onchain transaction records may serve as the primary books and records for unit deals, and firms do not need a full off‑chain mirror if they maintain appropriate operational resilience plans.

The guidance applies to UCITS and other authorized funds and allows registers to sit on public DLT networks if firms meet the regulator’s expectations on governance, data privacy and financial crime controls. Units in a single share class can be recorded across multiple blockchains as long as investors’ rights and the structure of charges remain the same.

Direct-to-Fund Dealing Model to Support Tokenization

The main rule change is the introduction of the optional Direct‑to‑Fund dealing model, which alters how subscriptions and redemptions are processed. Under D2F, the fund or its depositary, rather than the asset manager, becomes the counterparty to investor trades, so units are issued or canceled directly against cash flows between investors and the fund in a single step.

The FCA says this should make operations more efficient and easier to align with onchain or shortened settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term cycles. Following industry feedback, the regulator will still allow managers to deal as principal in units of a fund using D2F and to combine different dealing models within an umbrella structure.

Looking ahead, the FCA outlines a roadmap from tokenized funds to tokenized assets and ultimately tokenized cash flows, including models where investors hold tokenized assets in digital wallets and managers use smart contracts to manage portfolios.

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It also signals openness to waivers that would let funds use digital cash and stablecoins for settlement and certain expenses, ahead of a broader crypto asset and stablecoin regime due to take effect in October 2027.

The FCA's journey toward approving tokenized funds has been building since 2023, when it collaborated with industry groups to publish the UK Blueprint model outlining how firms could run tokenized unitholder registers within existing legal frameworks.

Running parallel to this tokenization roadmap, the FCA has been developing a comprehensive crypto asset regulatory regime that began with legislation passed in February 2026. It launched a sterling stablecoin sandbox in March 2026, and will open firm authorization applications in September ahead of the full regime taking effect next year.