UK: FCA policy statement on fund tokenisation

This is one of a series of three briefings on PS26/7, focussing on tokenised money market funds (tMMFs), the fund tokenisation roadmap and supporting future tokenisation models.  Separate briefings cover the Direct to Fund (D2F) model and the tokenisation of authorised funds:

• UK: FCA finalises Direct2Fund rules in PS26/7 
• UK: FCA policy statement on tokenisation of authorised funds 

See also our previous client briefing:

• UK: FCA consultation CP25/28 on fund tokenisation: tMMFs; the roadmap; future tokenisation models

Why should I read this?

In policy statement PS26/7 “Progressing Fund Tokenisation” (published 30 April 2026), the FCA confirms its final rules and guidance in response to consultation paper CP25/28. The new rules and guidance included in the policy statement enter into force with immediate effect.

What do I need to know about tMMFs?

The FCA’s response to feedback on tMMFs is set out in Chapter 4 of PS26/7 (paragraphs 4.1–4.4).

Tokenised money market funds and response to CP23/28

In its response to feedback on consultation paper CP23/28, the FCA confirmed it is supporting firms exploring use of tokenised assets to aid collateral mobility and is working with the Bank of England to take this forward. The FCA confirmed the categories of money market funds (MMFs) which are eligible collateral for uncleared transactions under UK EMIR and that any extension of eligible MMF categories must be within acceptable risk tolerance and ensure collateral remains safe, liquid and accessible during market events. The FCA intends to take this discussion forward in collaboration with the Bank of England, HM Treasury and firms via the Wholesale Financial Markets Digital Strategy.

Fund tokenisation roadmap

The FCA’s response to feedback on the fund tokenisation roadmap is also set out in Chapter 4 of PS26/7. This covers supporting use of stablecoins, tokenised financial assets, and public distributed ledger technology (DLT) networks.

Supporting use of stablecoins to settle unit deals

In CP25/28, the FCA considered how authorised funds could use digital assets for non-investment purposes such as settling unit transactions, paying distributions, and covering gas fees on DLT networks. The FCA suggested an interim approach through rule modifications or waivers before making formal rule changes later, and included a template showing how this could work.

Respondents expressed strong support for allowing authorised funds to use digital cash and money-like instruments for operational purposes. Respondents also suggested additional uses including:

• governance tokens;
• staking to speed up transaction validation;
• supporting cross-chain activity with wrapped tokens;
• making payments to service providers; and
• settling trades in a fund’s underlying assets.

FCA response on stablecoins

The FCA supports the development of on-chain cash instruments and fully on-chain funds in the UK. It is open to further discussion with stakeholders and does not plan to restrict stablecoins to UK-issued products at this time.

Without modification, authorised funds could not hold such digital cash or money-like instruments, as they would not be eligible investments. Firms may use the template published with CP25/28 as a baseline to support applications to waive or modify rules.

Importantly, the FCA notes that under article 72AA of the Restricted Activities Order (RAO), firms managing a UK UCITS or AIF are exempt from other RAO activities where carried on in connection with managing the fund. The Cryptoasset Regulations keep this exemption for new cryptoasset activities. Similarly, under Article 42A RAO, depositaries are excluded from safeguarding activities in respect of the AIF/UCITS. This exclusion has been extended to qualifying cryptoassets and related specified investments in cryptoassets (SICs).

Tokenised financial assets

The FCA confirmed that there are no regulatory barriers preventing UK authorised funds from investing in tokenised forms of eligible assets, although in response to the consultation some firms raised concerns that transactions in tokenised financial assets could require Money Laundering Regulations (MLRs) registration as a cryptoasset exchange or custodian wallet provider.

The FCA notes that the Cryptoasset Regulations provide a new framework and certain exemptions from registration under the MLRs. In particular, the Cryptoasset Regulations extend the article 72AA exemption to include new cryptoasset activities, meaning that AIF and UCITS managers will be able operate a register on DLT without additional MLR registration or new cryptoasset permissions.

Supporting future tokenisation models

Chapter 5 of PS26/7 sets out the FCA’s response to the discussion chapter in CP25/28 on future tokenisation models, designed to elicit cross-industry views on longer-term ambitions. There was a broad range of views expressed by respondents on all of the discussion topics.

The FCA encourages firms wanting to explore tokenised portfolio management and composable finance to take advantage of its open-door policy to discuss any initiatives with the FCA.
The FCA confirms that the UK Investment Management Taskforce’s Technology Working Group will take forward work to progress fund tokenisation and retail digital markets.

Next steps

The new rules and guidance made in PS26/7 enter into force with immediate effect (30 April 2026).

The FCA’s digital assets roadmap includes work on a vision for UK wholesale capital markets adopting DLT, including regulatory principles and red lines.  The FCA intends to seek views on this later in 2026.

The UK Investment Management Taskforce’s Technology Working Group will take forward work to progress fund tokenisation and retail digital markets.

If you would like to discuss any aspect of PS26/7 or its implications for your business, please contact us. We are actively engaged in the FCA’s work in this area and can assist with implementation of the new rules and guidance.

How Eversheds Sutherland can help

Eversheds Sutherland has one of the largest and most experienced investment funds teams in the UK and Europe. We regularly advise managers, depositaries, transfer agents, and platform providers on regulatory developments and product structuring.

Our team can assist with:

• Advising on the regulatory framework for tokenised funds and DLT implementation;
• Structuring tokenised fund products (UCITS, NURS, QIS, LTAFs);
• Register arrangements and smart contract governance;
• Operational resilience and contingency planning for DLT networks;
• Depositary oversight arrangements;
• Engagement with the FCA and industry working groups; and
• MLR registration and AML compliance.