UK Approves Fund Tokenization: FCA D2F & Blueprint Rules Plus Digital Currency Roadmap

The UK Financial Conduct Authority (FCA) has approved guidance for fund tokenization under existing regulations, aiming to help asset managers use distributed ledger technology (DLT) while staying within the current regulatory perimeter. A key update is the optional Direct to Fund (D2F) model, where the fund (or its depositary) becomes the counterparty to investor trades, enabling a single-step issuance/cancellation flow and supporting atomic on-chain settlement for newly issued units. The FCA also backs tokenized authorised funds using the industry “Blueprint” model. It says an on-chain transaction record may serve as the primary “books and records” for unit deals, potentially reducing reliance on a full off-chain mirror record if “appropriate resiliency plans” are in place. The regulator previously authorized the first tokenized UK UCITS under Blueprint in January 2025. Looking ahead, the roadmap includes exploring DLT-enabled UK wholesale market infrastructure and possible rule changes/waivers to allow digital assets for non-investment operational uses (e.g., settlement, distributions, and DLT gas fees). Separately, the FCA is in final consultation for a broader UK digital currency regime, with new rules due in summer, an authorization window starting September 30, and implementation on October 25, 2027. For crypto traders, this is mainly a regulatory clarity catalyst for the tokenized funds narrative tied to fund tokenization, rather than an immediate driver of spot crypto liquidity.