The UK’s FCA has launched a consultation on proposals that would enable asset managers to issue tokenised versions of their funds on public blockchains such as Ethereum.
The Financial Conduct Authority said the initiative aims to modernise fund structures and potentially appeal to a younger demographic of investors increasingly active on digital platforms. Until now, UK funds have only been permitted to use private blockchains. The new proposal would mark a shift toward public networks, where digital tokens would represent shares in investment funds. According to FCA officials, tokenisation could streamline fund operations, reduce administrative costs, and improve transparency.
Britain aims to strengthen its digital asset framework
The consultation forms part of the UK’s goal to expand its role in the global digital asset sector. The government has previously indicated interest in closer collaboration with the United States on crypto-related policy. The FCA also invited industry feedback on the potential use of stablecoins, cryptocurrencies tied to the value of fiat currencies, as settlement assets for tokenised funds.
Officials from the FCA noted that while tokenisation could enhance market efficiency, the benefits might emerge gradually as firms update their systems to support blockchain technology. They added that the shift aligns with changing investor expectations, particularly among younger retail users. According to Reuters, nearly half of all trading app users in the UK are between 18 and 34 years old, and they tend to favour low-cost, fractional investments rather than traditional funds.
The regulator confirmed that a separate review will assess whether regulated funds should eventually be permitted to hold direct cryptocurrency exposures, a step that could further integrate digital assets into mainstream finance.
