Tokenisation moves from sandbox to handbook

For nearly three years, fund tokenisation has been a "watch this space" topic for UK asset managers. The Investment Association's blueprint, the Treasury Asset Management Taskforce, the FCA's discussion papers. Lots of interest, not much regulatory clarity.

That's now changed. On 30 April 2026, the FCA published PS26/7, "Progressing Fund Tokenisation". The new rules and guidance are in force.

There are two genuinely useful shifts in the policy statement, and one quieter signal about where things are heading.

On-chain registers, finally

Authorised fund managers can now use distributed ledger technology — the technology that underpins blockchain — as the official register of investor ownership. The on-chain record can sit as the primary books and records. Firms no longer need to keep a duplicate "mirror" off-chain, provided they have appropriate resilience arrangements in place.

This sounds technical, but the practical implication is large. The previous expectation that tokenised funds run alongside a parallel traditional register added cost and operational risk. Removing that requirement makes tokenisation a credible operating model rather than a parallel experiment.

That said, none of the existing prudential and governance expectations have gone away. Records still need to be accurate, complete, and recoverable. The FCA is allowing a different technology to do the job, not lowering the bar.

The Direct to Fund model

The second shift is the new optional Direct to Fund (D2F) dealing model. Under D2F, investors deal directly with the fund rather than routing transactions through the manager's own dealing account.

This applies to both traditional and tokenised funds, which is worth pausing on. You don't need a tokenised fund to use D2F. The model is a structural option for any authorised fund that wants to remove a layer from the dealing chain.

For firms thinking about adopting it, the practical questions are about transfer agency (TA) arrangements — that's the administrative function that handles investor subscriptions, redemptions, and record-keeping — the operational mechanics of those subscriptions and redemptions, and how D2F sits within existing distribution agreements.

The size of the prize

In its consultation paper CP25/28, the FCA estimated the D2F model alone could deliver net benefits of £27–£57 million over ten years across roughly 2,600 firms, between them managing £16.5 trillion in assets.

That's a wide range, and the benefit for any individual firm depends on its current operating model. Firms with thin margins or heavy operational costs may see the bigger end. Firms already running efficient TA arrangements may see less.

The value, in our view, is less about cost savings and more about strategic optionality. Tokenisation is now a credible product design choice. D2F is a credible operating choice. Both can sit alongside the traditional model.

What to think about now

A few starting points for fund managers:

How do DLT-based registers and D2F interact with your wider compliance environment, including any client money arrangements? You shouldn't assume the technology choice is invisible to the rest of your regulatory framework.

What changes for your TA relationship under D2F? Some TAs are already developing propositions, others aren't. The contractual conversation is one to start now.

Is tokenisation a product strategy question for your business, rather than a research project? The FCA has signalled that further work — including settlement using digital cash and stablecoins — is coming later in 2026. Firms that have done the groundwork will be better placed to respond.

A note on what isn't yet settled

The FCA has flagged that it may consult on settlement using digital cash and stablecoins later in 2026. Settlement is the operational backbone of fund dealing, so anyone designing a tokenisation roadmap should treat the current rules as a foundation, not the final picture.

We've a few concerns about how D2F arrangements will interact with existing distribution and platform contracts, particularly where investor relationships sit with intermediaries today. These are practical issues that firms will work through as the model matures.

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Adempi advises UK asset managers and private market firms on FCA permissions, fund structures, and the governance underpinning new product launches. Get in touch if you'd like to explore how PS26/7 could fit into your operating model. You can reach the team on contact@adempi.co.uk or on 0203 925 4761.