A blueprint model has been designed to facilitate tokenization of funds for asset management by the united kingdom's financial regulator.

Investment managers in the united kingdom receives a regulatory support to leverage the Blockchain technology for the tokenization of funds breaking through the conventional record keeping systems.

The Investment Association recently published a report arguing that fund tokenization, issuing tokenized or shares on distributed ledger technology (DLT) will lead to a more efficient and transparent financial industry.

Particularly, the use of a real-time record keeping systems shared across all parties servicing the fund will reduce the fund administration cost. Simplify the reconciliation process as well as allow quicker settlement times.

Sarah Pritchard, the Executive director of market international at the Financial Conduct Authority (FCA), emphasized that while the regulator is open to exploring innovative avenues for assets managers , it must also dealineate the potential risk.

"This is an exciting and paves the way for exploring more transformative use Cases in the future . We want to support firm to implement technological solutions which enhance and strengthen the UK's assest management industry while addressing risk's and potential harms "

Meanwhile the report proposed certain principles for implementing tokenized funds.

1. relevance to both domestic and international investors and avoiding an arrow focus solely on the investment asset managers industry.

2. offer opportunity to the widest possible range of firm accros the industry, rather than focusing on a particular type of firm, product type, asset class, or customer group .

3. It articulated the need for an accompanying roadmap for delivery and a focus on competitiveness and efficiency within the sector.

Most importantly, there's an indication that the fund will have to be established in the UK , and be FCA authorized, along with having to adhere to traditional Financial industrial standards. It further stated that the legal and the regulatory rules would remain the same.

The UK government in a separate statement reiterate its support for the blueprint model, declaring its commitment to improving innovative approaches within the nation.

"The government warmly welcomes this publication, it will advance the wider conversation on the role of technology in asset management and signals that the UK is welcoming of innovation and open for the exciting new business of the future."

This follows recent news that investment firms in the UK have been strengthening their staff dedicated to digital assets and according to survey 24% of asset management firms adopted a digital asset strategy, with an extra 13% planning to do so in the next two years.