The UK is moving to modernise its financial markets, with the Financial Conduct Authority (FCA) proposing to allow asset managers to “tokenise” investment funds on public blockchains like Ethereum (ETH-USD). But, will this help revive the UK’s plan to become a global crypto hub?
On Tuesday, the FCA set out plans to encourage the adoption of tokenisation, aiming to drive innovation and growth in the asset management sector. The proposals include guidance to help firms understand how to use the technology safely.
Under the plans, fund managers will be able to issue crypto tokens representing shares in their funds, allowing near-instant, 24/7 settlement. The regulator is also asking for feedback on whether stablecoins could be used as a settlement method.
“Tokenisation has the potential to drive fundamental changes in asset management, with benefits for the industry and consumers,” said Simon Walls, executive director of markets at the FCA.
Read more: Crypto live prices
Will Beeson, founder and CEO of Uniform Labs, told Yahoo Finance UK that the FCA’s approach could help resuscitate the UK’s ambition to become a global crypto hub. “If the UK embraces public chains and enables 24/7, instant, delivery-versus-payment settlement, London can be a magnet for issuance, market infrastructure, and talent,” Beeson said.
He noted that UK fund managers already rank among the world’s leaders, and tokenisation offers a way to maintain that position by creating faster, more connected financial markets. By representing assets as tokens on a shared network, transfers and reconciliations happen almost instantly.
“The real opportunity is in creating open, connected blockchain systems rather than closed-off networks that don’t talk to each other,” he said.
Appealing to younger, crypto-native investors
Tokenised funds could also resonate with a new generation of investors who are used to crypto and always-on, app-based finance.
Beeson highlighted that tokens act as inputs to digital applications, enabling automated flows and simple wallet experiences. “The draw is 24/7, instant settlement, not T+2, which fits trading-app behaviours and on-chain norms,” he said.
He added that tokenisation blurs the line between spendable and investable assets. Users can hold all their capital in the equivalent of a savings account and instantly convert it to stablecoins to pay, or back into funds to earn yield. Tokenised money-market funds become a “natural value-at-rest counterpart to stablecoins as value-in-motion”, according to Beeson.
Stablecoins as the ‘cash rail’ for tokenised markets
Beeson also outlined the critical role stablecoins could play if allowed as settlement instruments. He said they would act as the “value in motion,” complementing tokenised funds, which serve as “value at rest.”
“The only way for financial markets to really run on-chain is for securities to be issued natively as tokens and to settle against tokenised cash, whether that means stablecoins or tokenised deposits,” he said.
With stablecoin settlement, subscriptions and redemptions could be executed programmatically and near-instantly, reducing settlement risk and improving efficiency. Beeson described this as enabling funds to operate with the same speed and composability as the rest of on-chain finance, creating a seamless and liquid system for investors.
Looking ahead, Beeson envisions a future where traditional finance, tokenised funds, and decentralised finance (DeFi) interact within the same applications. “Crypto and DeFi, including prediction markets, will be able to interact directly with tokenised financial assets in the same marketplaces, the same apps, and the same user experiences,” he said. “That convergence is where the true innovation lies.”
Download the Yahoo Finance app, available for Apple and Android.
