UK Government Gives the Go Ahead for Revolutionary Tokenization Program
The government of the United Kingdom has taken a giant leap toward using blockchain technology and tokenization.
Progressive legislative frameworks and policies are being considered by the British government as a means to embrace digital assets and increase their adoption throughout the nation.
The government has announced yet another crypto-forward initiative this year, this time a new tokenization program that will allow domestic funds to use blockchain technology to tokenize their assets. This will mark a departure from traditional record-keeping methods and an indication of the current administration’s dedication to encouraging innovation in the financial sector.
Tokenization may help authorized funds become more efficient, transparent, and competitive in the investing business; the UK formally approved a plan to achieve just that on November 24.
The government’s Asset Management Taskforce’s Technology Working Group is spearheading the program, which is a joint venture between the FCA, HM Treasury, and prominent investment firms including BlackRock.
The group’s extensive research, “UK Fund Tokenization: A Blueprint for Implementation,” lays out a detailed plan for using fund tokenization that is possible by Distributed Ledger Technology (DLT).
The study states that funds approved by the FCA may use tokenization for sales and redemption operations initially, provided they follow all applicable laws and regulations. Part of this is sticking to tried-and-true methods of asset appraisal and settlement, and another part is avoiding specialized investments.
The government is committed to assisting funds in incorporating tokenization into their current systems so that they may take use of distributed ledger technology (DLT) for features such as holder registration and sales and redemptions.
In order to be eligible for tokenization, FCA-authorized funds must fulfill certain requirements, such as having mainstream assets and following standard valuation and settlement schedules. With a more thorough integration of DLT anticipated in the future phases of tokenization outlined in the plan, changes to legal or regulatory frameworks may be necessary.