UK: FCA policy statement on tokenisation of authorised funds

This is one of a series of three briefings on PS26/7. This briefing focuses on the tokenisation of authorised funds as set out in Chapter 2 of the policy statement. Separate briefings cover the Direct to Fund (D2F) model and the wider regulatory framework, tokenised money market funds (tMMFs), and the FCA’s roadmap for future models:

• UK: FCA finalises Direct2Fund rules in PS26/7
• UK: FCA policy statement on fund tokenisation: tMMFs; the roadmap; and future tokenisation models 

See also our previous client briefing:

• UK: FCA consultation CP25/28 on fund tokenisation: tokenisation of authorised funds

Why should I read this?

In Policy Statement PS26/7, “Progressing Fund Tokenisation”, (published 30 April 2026), the FCA confirms new guidance and rules on the tokenisation of authorised funds ,to enter into force with immediate effect.

The guidance is intended to give firms confidence and certainty on how to tokenise authorised funds while complying with existing FCA rules. It builds on the Blueprint Model developed with the Investment Association’s Technology Working Group and confirms that public blockchains are acceptable venues on which to host tokenised funds, provided appropriate controls are in place.

What do I need to know about fund tokenisation?

‘Tokenisation’ refers to the representation of ownership or rights on a distributed ledger – a type of technology where records of transactions or ownership are held in multiple locations rather than a single centralised database (distributed ledger technology, or DLT).

‘Fund tokenisation’ refers to the use of DLT in the registry and transaction functions of a fund – i.e. representing fund units as tokens on a distributed ledger, and using that ledger to record transfers, subscriptions and redemptions.

Accelerating tokenisation of authorised funds

Chapter 2 of PS26/7 sets out the FCA’s final guidance on accelerating the tokenisation of authorised funds. The guidance consulted on in CP25/28 has been finalised with certain amendments in response to feedback.

The guidance applies to UCITS management companies, UK AIFMs managing authorised funds, and depositaries of authorised funds. It will also be relevant to AIFMs and depositaries of unauthorised funds, portfolio managers, platform providers, advisers, custodians, fintechs and stablecoin issuers.

A key outcome of PS26/7 is the confirmation that public blockchains, and not just private-permissioned networks, are acceptable for use in respect of tokenised funds, provided appropriate controls are in place to meet the outcomes in FCA rules. The FCA has also confirmed that the use of such public DLT within fund management does not constitute outsourcing by the manager.

Authority of managers to amend registers

CP25/28 proposed that an authorised fund manager (AFM) must retain authority over the register in order to correct errors, assist investors, and process decisions of a court. Respondents supported this outcomes-based approach and gave examples of how it could be achieved even on public DLT.

The FCA has confirmed that the guidance is illustrative. Alternative ledger-based mechanisms or verifiable governance options can be used if consistent with register rules and OEIC Regulations. The FCA has added guidance on freeze/unfreeze and forced transfer functionality as ways to:

• manage unitholder processes;
• effect decisions of a court; and
• resolve register management problems.

It is intended that firms have flexibility to select appropriate solutions for their target market, product, network choice or circumstance. The FCA is largely agnostic as to the technological mechanisms used to achieve regulatory ends.

Units on multiple blockchains

The FCA has confirmed that units in a given class may be issued on multiple blockchains, without creating a different class of unit, provided that:

• the underlying rights of holders remain the same;
• the nature of charges and expenses that may be taken from scheme property remain the same;
• general rules on payments out of scheme property still apply; and
• rules do not permit payments to third parties for safekeeping/administration of units on behalf of unitholders (rather than on behalf of the authorised fund).

On-chain records as primary books and records

The FCA has amended its draft guidance to confirm that firms need not maintain a “mirror” of on-chain information if FCA requirements are met. The on-chain record of transactions may be considered the primary books and records for this activity.

However, firms must still ensure operational resilience and investors and entities wishing to inspect the register or effect transactions must be able to do so. In practice, firms may wish to create some sort of mirror or back-up system (maybe by retaining snapshots) to ensure that these requirements are met.

Smart contracts and eligibility verification

The FCA has finalised guidance on using technology solutions including smart contracts for unitholder processes and know your customer (KYC) as consulted on in CP25/28. Whitelisting/allow lists remain the primary mechanism described for restricting who may hold or transact in tokenised fund units.

Depositary oversight

While depositaries asked for additional guidance for their oversight of on-chain activity, the FCA does not propose formal guidance in this area at this stage, because the relevant rules are independent of legal structures and technologies.

Additional areas of feedback

PS26/7 notes a number of areas of feedback from respondents that fall outside the scope of the final guidance but which the FCA and industry will continue to progress:

• Token and network standards – respondents emphasised the importance of consistent, high-quality international standards for regulation, interoperability, and scale
• Secondary trading/P2P – tokenisation has immediate potential for secondary market transactions; this raises issues around disclosures, settlement finality, indicative pricing (oracles), and gas fees
• On-chain ID – respondents thought it would be desirable to use digital solutions for KYC and operational efficiencies; this will be progressed through industry forums and standard-setting bodies (not by the FCA)
• Money Laundering Regulations (MLR) registration – the FCA has confirmed, by reference to the final statutory provisions laid before Parliament to create the regulated activities regime for cryptoassets, which was published after CP 25/28, that firms authorised under FSMA to carry on cryptoasset activities will not need separately to be registered as cryptoasset exchange providers or custodian wallet providers under the MLRs, although they will need to notify the FCA when they start and cease to do so.

Next steps

The new guidance enters into force with immediate effect from 30 April 2026. Firms should consider this guidance if they are considering launching a tokenised authorised fund.

Key points for firms:

• The FCA encourages firms to take advantage of its open-door policy and Innovation Services when considering tokenised fund launches;
• Further work on wholesale capital markets and DLT regulatory principles is expected later in 2026;
• The UK Investment Management Taskforce Technology Working Group will continue to progress fund tokenisation; and
• The new cryptoasset regulatory regime comes into force in October 2027, addressing MLR registration concerns.

Eversheds Sutherland was closely involved in developing the Blueprint Model and continues to advise firms on implementing tokenised fund structures. We are happy to assist firms in understanding and responding to the new guidance.

How can Eversheds Sutherland 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.