The Financial Conduct Authority (FCA) published Policy Statement PS26/7: Progressing Fund Tokenisation on 30 April 2026, along with final rules amending the FCA Handbook. PS26/7 sets out guidance for asset managers on how to use distributed ledger technology (DLT) within the FCA's existing rules when tokenising funds, and introduces an optional Direct to Fund (D2F) dealing model. The policy statement and rules are operative with immediate effect upon publication.
The controlling authority for PS26/7 is the FCA's powers under the Financial Services and Markets Act 2000, including the FCA's rule-making powers in Chapter 3 of the Collective Investment Schemes sourcebook (COLL) and the Client Assets sourcebook (CASS), as amended by PS26/7. The guidance confirms that fund tokenisation, which uses DLT to represent units or shares of a fund, is permissible within the existing COLL and CASS rules where the DLT arrangements meet specified conditions, including in relation to custody, settlement, and record-keeping. The D2F model created by the new rules allows investors, whether in traditional or tokenised funds, to deal directly with the fund without an intermediary in the distribution chain. The policy statement also sets out the FCA's roadmap for further development of fund tokenisation within digital asset management, including engagement with DLT use in UK wholesale markets.
Asset managers, authorised fund managers (AFMs), and depositaries considering fund tokenisation must assess whether their proposed DLT arrangements satisfy the existing COLL and CASS requirements, as clarified by PS26/7. The guidance addresses: (i) on-chain versus off-chain record maintenance and the conditions under which both are permissible; (ii) the use of digital cash instruments (such as tokenised cash or central bank digital currencies) for settlement within tokenised fund operations; and (iii) custody arrangements, including conditions under which DLT-based custody satisfies CASS requirements. Intermediaries and platforms distributing tokenised funds must consider their existing regulatory permissions in the context of the D2F model. The UK manages approximately £16.5 trillion in assets, and the FCA has described fund tokenisation as part of its strategy to support growth and innovation in asset management.
Open questions remain on some aspects of the tokenisation roadmap. The FCA intends further engagement with industry on DLT use in UK wholesale markets, and additional guidance may follow. The policy statement does not address all aspects of secondary market trading for tokenised fund units, and the D2F model's interaction with existing clearing and settlement arrangements warrants further analysis.
Our firm advises asset managers, AFMs, depositaries, and fintech firms on FCA regulatory compliance for fund tokenisation, DLT-based product structuring, COLL and CASS compliance, and engagement with the FCA's digital asset roadmap. We maintain a dedicated partner network covering UK fund regulation and digital assets. Contact us to discuss the effect of PS26/7 on your fund business: work we undertake includes fund tokenisation compliance, DLT custody structuring, COLL rule analysis, D2F model implementation, and wholesale digital markets engagement.
Source: Financial Conduct Authority, Policy Statement PS26/7: Progressing Fund Tokenisation, published 30 April 2026, https://www.fca.org.uk/news/press-releases/fca-sets-out-guidance-support-innovation-fund-tokenisation (confirmed 3 May 2026); Financial Services and Markets Act 2000; FCA Handbook, COLL and CASS sourcebooks as amended.
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