The Financial Conduct Authority (FCA) officially released on April 30, 2026, the final rules and guidance allowing United Kingdom investment funds to utilize distributed ledger technology (DLT). Through the issuance of policy statement PS26/7, the British regulator authorizes asset managers to maintain investor registers entirely on-chain, removing the previous requirement for full off-chain duplicates, provided that robust operational resiliency plans are in place.
This regulatory update aims to integrate tokenization within existing investor protection frameworks rather than creating separate, parallel experimental structures. The initiative aligns with the financial modernization strategy detailed in the January 2025 letter sent to the Prime Minister, which established a roadmap for the digitalization of UK capital markets. By implementing these measures, the FCA seeks to drive operational efficiency in the asset management sector, allowing settlement and transaction recording to occur natively on DLT networks.
The execution of these rules relies on the “Blueprint” model, an industry framework designed to validate that on-chain records can satisfy the legal requirements for primary ledgers. Under this scheme, the FCA has authorized the use of public DLT networks for issuing fund units, provided that firms’ internal controls maintain the integrity of investor rights and ensure that financial charges remain consistent across all platforms used.
This regulatory progress occurs during a transition period for the digital industry, where the regulator has significantly increased its oversight. It is important to note that, under the current supervisory framework, registered crypto companies must reapply for FCA approval if they intend to operate under the new financial services standards, reflecting a tightening of compliance requirements. The Blueprint model has already facilitated the authorization of the first tokenized Undertakings for Collective Investment in Transferable Securities (UCITS) in the UK jurisdiction, proving the technical viability of these operations.
The Direct-to-Fund (D2F) Mechanism and IAC Accounts
A significant structural change introduced by the FCA is the creation of the optional Direct-to-Fund (D2F) dealing model. In this system, the fund or its depository acts as the direct counterparty in transactions with the investor, replacing the manager’s role as the primary intermediary in the trade. The Direct-to-Fund model allows fund units to be issued or canceled directly against cash movements between the investor and the fund, streamlining the settlement process.
To operationalize this model, the regulator has enabled the use of Issues and Cancellations Accounts (IAC). These are specific bank accounts designed to receive subscriptions and execute redemptions more efficiently. According to the FCA guidance on fund tokenization innovation, this framework aims to align British fund operations with on-chain settlement practices and international standards seen in financial hubs like Luxembourg or Ireland. Simon Walls, the FCA’s Executive Director of Markets, emphasized that this practical framework gives firms the confidence to operate within the agency’s conduct rules.
The FCA’s vision for 2026 and beyond includes an evolution that goes beyond simple investor record-keeping. The proposed roadmap is divided into phases that include the tokenization of the underlying assets within fund portfolios and, ultimately, the tokenization of cash flows. Asset managers will be able to use smart contracts to manage digital portfolios directly in investor wallets, which would facilitate the automation of processes such as dividend payments or portfolio rebalancing.
The regulator has expressed its willingness to grant regulatory waivers so that funds can experiment with digital cash and stablecoins for settling subscriptions and management expenses. However, these experiments must be conducted under FCA supervision before the full cryptoasset regime, covering stablecoins, custody, and staking, takes effect in October 2027. Throughout 2026, the financial authority will continue to seek industry feedback on expanding DLT use in wholesale markets to ensure market infrastructure adapts to digital liquidity demands.
This article is for informational purposes and does not constitute financial advice.
