UK FCA Approves On-Chain Fund Registers, Direct-to-Fund

The Financial Conduct Authority finalized policy statement PS26/7 on Thursday, allowing authorized UK fund managers to maintain official investor registers on blockchain and offering an optional Direct-to-Fund dealing model. The rules take effect immediately and apply to roughly 2,600 firms managing about £16.5 trillion in assets.

Under the new rules, authorized fund managers may use distributed ledger technology as the official record of investor ownership without keeping a full duplicate off-chain register, provided they meet operational resilience, governance, data protection and anti-money-laundering requirements. Funds may operate on public or private blockchains and across multiple networks as long as investor rights and fee structures remain the same. The policy formalizes a framework the FCA tested from January 2025, when it authorized the UK’s first tokenized UCITS fund under an industry “Blueprint” model.

PS26/7 also establishes an optional Direct-to-Fund, or D2F, dealing model in which the fund or its depositary becomes the counterparty to investor transactions. Under D2F, investors buy or sell directly with the fund in a single step, and units are issued or canceled as cash moves between investor and fund. The FCA said the model could reduce operational friction and better align dealing with faster settlement systems, including blockchain-based infrastructure. Managers may continue to use traditional dealing models or combine approaches within umbrella fund structures.

The FCA described PS26/7 as the first stage of a three-stage digital assets roadmap. Stage two will extend rules to traditional securities moved on-chain. Stage three will cover tokenized cash flows that enable portfolio management through wallets and smart contracts. The regulator said it may consult on settlement using digital cash and stablecoins later in 2026. The framework sits alongside a broader cryptoasset regime that proposes Consumer Duty rules, safeguarding requirements for client cryptoassets and tougher governance for large stablecoin issuers, with parts of that regime scheduled to take effect in October 2027.

Operational requirements in PS26/7 focus on preserving investor protections. Firms using on-chain registers must demonstrate resilience and effective governance, maintain data protection standards, and keep controls to prevent financial crime. The rules permit multi-network operation but require that on-chain records reflect the same ownership rights and fee arrangements investors would have under conventional registers.

Simon Walls, the FCA’s executive director of markets, described tokenization as having “an important role in asset management” and called the policy “a practical framework to give firms confidence in how fund tokenisation can operate within the FCA’s rules.” Industry research has noted rising interest in tokenization. Bitwise researchers wrote that “tokenisation … is having a moment.” Robinhood chief executive Vlad Tenev told a conference that “Tokenisation is like a freight train. It can’t be stopped, and eventually it’s going to eat the entire financial system.”

The FCA said managers may adopt tokenization gradually. Firms that prefer conventional registers can continue to use them, while others can test on-chain registers or the D2F model under the new rules. The regulator indicated further consultations and rule changes may follow as use of on-chain systems expands beyond fund registers to securities and tokenized cash flows.