UK FCA Proposes Tokenised Funds on Public Blockchains

The UK’s Financial Conduct Authority (FCA) has initiated plans to enable tokenised investment funds on public blockchains, like Ethereum, aiming to innovate the asset management industry. This decision seeks to include a demographic shift towards younger investors.

The plan involves the FCA and its key leader, Simon Walls, who stated tokenisation could transform asset management. The FCA aims to provide clarity and confidence to asset managers as they explore this field, potentially placing the UK as a global leader.

Immediate impacts include potential growth in the UK’s $19 trillion asset management industry through blockchain adoption. As tokenisation becomes mainstream, Ethereum stands to benefit alongside DeFi protocols and other public chains.

Financial implications may include enhanced liquidity and potential rise in DeFi activity and Ethereum’s TVL. It’s expected to stimulate institutional interest, although detailed funding information by the FCA remains undisclosed.

Historical precedents in Switzerland and Singapore provide insights into potential impacts, such as increased activity in DeFi sectors when mainstream funds tokenize assets. For further discussion, you can visit The Paypers.

The potential outcomes involve regulatory shifts supported by the Bank of England. This initiative could influence Ethereum’s role, potentially increasing adoption in Layer 1 and DeFi protocols, impacting tokens like UNI and AAVE.

Simon Walls, Executive Director of Markets, FCA, “Tokenization has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers. There are many things that firms can do under our existing rules and more that become possible with the changes we propose enacting now.” FCA Press Release