Investor Group Supported by UK Government Releases Roadmap for Fund Tokenization
An investor group representing trillions of dollars in assets has unveiled a new roadmap for fund tokenization, which has been approved by the UK government. The Investment Association, a working group with over $11 trillion in assets under management, has published a report outlining its plan to implement tokenized funds that trade on blockchains.
The report explains that tokenized funds issue digitized shares or units that represent an investor’s interest in them. These shares are traded and recorded on distributed ledgers instead of traditional systems. The goal of tokenized funds is to provide a way to interact with increasingly digitized capital markets and enable the issuance and trading of various asset classes using distributed ledger technology (DLT).
Fund Tokenization Distinct from Other Digital Assets
The Investment Association emphasizes that fund tokenization is different from other digital assets, such as cryptocurrencies and non-fungible tokens (NFTs). While some confusion exists due to their common origin in digital asset technology, the report clarifies that the discussion does not include cryptocurrencies, NFTs, or other unbacked crypto assets. The investment management sector has generally approached these assets cautiously due to perceived risk and volatility.
Positive Reception from UK Government
Sarah Pritchard, the Executive Director of the UK’s Financial Conduct Authority (FCA), has welcomed the report on fund tokenization. The government sees it as a pioneering effort to identify and articulate the benefits of technology innovation for investors and the asset management industry as a whole.
Hot Take: Investor Group Proposes Tokenization Roadmap for UK Funds
An investor group with trillions of dollars in assets has released a roadmap approved by the UK government for implementing tokenized funds. These funds utilize distributed ledger technology to issue digitized shares or units that represent an investor’s interest. The Investment Association, which oversees over $11 trillion in assets, believes that tokenized funds will enable greater interaction with digitized capital markets and the trading of various asset classes using blockchain technology. The report clarifies that fund tokenization is distinct from cryptocurrencies and other digital assets. The UK government has shown support for this initiative, recognizing its potential benefits for investors and the asset management industry.
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