Tokenization of Investment Funds Now Permitted in the UK – Adoption on the Rise?

cryptonews.com:

UK investment funds have received the green light for tokenization, marking a strategic move to harness blockchain technology within the asset management sector.

This approval was disclosed in a press release by The Investment Association, a renowned trade body in the industry, on November 24.

We are excited to announce the first phase of @hmtreasury Asset Management Taskforce – Technology Working Group's work on harnessing the potential of innovative technologies is now complete. Published today, the UK Fund Tokenisation report, provides the green light for the… pic.twitter.com/thrudAZRqt

— The Investment Association (@InvAssoc) November 24, 2023

The nod for tokenization stems from the re-establishment of the new Technology Working Group of Government’s Assets Management Taskforce on April 25, 2023.

The innovation was launched to harness the potential of technologies for liquidity growth in the UK’s asset management industry.

According to The Investment Association, the tokenization of funds will facilitate more cost-effective and transparent trading of assets, enabling investors to seamlessly access a broader range of assets.

To achieve this, the Working Group has collaborated closely with the UK Treasury and the Financial Conduct Authority (FCA) to publish a roadmap for adopting distributed ledger technology (DLT) through fund tokenization.

This roadmap is detailed in the report titled ‘UK Fund Tokenisation – A Blueprint for Implementation, outlining a 30-page comprehensive baseline model to integrate tokenization to work within existing legal and regulatory framework.

Presently, only FCA-authorized funds are allowed to implement the baseline approach to tokenization.

Referencing an example, the Investment Association stated