The British Investment Association allows asset management companies to participate in fund tokenization, but the method is restricted

Investment Association of the UK has released a mid-term report from the Government Asset Management Working Group's technical working group. The report outlines a blueprint that allows asset management companies to participate in fund tokenization now, but with limitations. However, it also provides a roadmap for wider adoption of DLT, enabling asset managers to reap all the benefits of tokenized funds.

Asset management companies are paying attention to tokenization activities in other jurisdictions as well as the potential huge cost savings of tokenization. Half of the £8.8 trillion ($11 trillion) fund industry in the UK represents assets managed by investors outside the UK. The report outlines three registries that could be used with DLT: a customer registry for recording ultimate beneficial owners, a unit registry for listing primary market investors (institutions), and an asset registry. In the first phase of tokenization, asset management companies will use licensed DLT for unit registration. However, the biggest benefits claimed by DLT will be obtained by the other two registration institutions, some of which require legal modifications.

Firstly, technically, tokenized funds are considered crypto assets, requiring asset management companies to register with the FCA to obtain a crypto asset anti-money laundering license. This is typically a slow process, so the FCA is studying how to speed up this process for compliant existing businesses.