On 24 November 2023, a Technology Working Group of industry experts established by HM Treasury’s Asset Management Taskforce issued a report, UK Fund Tokenisation – A Blueprint for Implementation.

Tokenisation refers to the issuing of units that are recorded on a distributed ledger, as opposed to units that are recorded on more traditional systems of record-keeping.

The report focuses on the application of distributed ledger technology through investment fund tokenisation, which presents a strategic opportunity to improve efficiency, transparency, and the international competitiveness of the UK’s investment sector. The report recommends a staged approach to fund tokenisation, starting with a ‘baseline approach’ that could be used within the existing legal and regulatory  framework, and progressing to more advanced stages over time.

The FCA has published a letter welcoming the report. The letter goes on to set out some of the rules that were considered in the development of the proposed ‘baseline approach’, so that there is a clear understanding of the FCA’s interpretation of the relevant regulatory requirements. Inevitably, each particular model may differ from the baseline approach, so firms will need to undertake their own due diligence and may wish to seek independent advice on their particular circumstances.