Michael LewisThe FCA is consulting on how it can support the development of fund tokenisation. As part of its wider roadmap for digital assets, the plans include:
- guidance on how to operate tokenised fund registers under FCA rules;
- a streamlined dealing model for fund managers to process buying and selling of units in authorised funds – regardless of whether tokenised or not. The FCA refers to this as a “direct to fund” model;
- how to address major barriers to using blockchains; and
- opening a discussion on how regulation might need to change to change to address it.
The paper notes how tokenisation can make fund management more efficient as it saves firms the current cost of reconciling and sharing data as the data will be available to all. While the FCA’s paper relates specifically to authorised funds, its wider roadmap should be of interest to all funds. The FCA as ever is looking to balance the expected greater competition that tokenisation will bring against consumer protection.
For the moment, the FCA is proposing to amend COLL to introduce a specific new annex on use of DLT for operating and maintaining authorised fund registers and introducing new provisions in COLL for direct dealing schemes.
The FCA welcomes comments by 21 November on most of its proposals and by 12 December on the wider changes.