The UK Financial Conduct Authority has unveiled a strategy to encourage asset managers to tokenise funds on public blockchains such as Ethereum, and launched a consultation on allowing stablecoins for fund settlement — a significant regulatory signal for the European and UK tokenised fund market.
According to Reuters, the FCA's proposals are partly aimed at attracting younger investors to fund products and improving operational efficiency through blockchain-based settlement infrastructure. The consultation represents a shift in the UK regulator's posture from cautious observation to active encouragement of public blockchain adoption for regulated fund products.
The timing is notable. The FCA's move follows the EU's ESMA recommendation to make the DLT Pilot Regime permanent, Luxembourg's Blockchain Law IV, and the CSSF's approval of Franklin Templeton's tokenised UCITS fund — suggesting a coordinated shift across European jurisdictions toward regulatory frameworks that support rather than merely tolerate public blockchain infrastructure for institutional fund products.
This is a regulatory proposal not a live product — no fund has yet been approved under the proposed framework. Its significance is as an enabler: FCA backing for public blockchain tokenisation removes a key uncertainty that has deterred UK-domiciled asset managers from committing to on-chain fund distribution.