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The CEO of M&G’s asset management business has announced consistent regulations around the tokenization of funds, after the UK government last year backed an industry-led blueprint for how funds can adopt blockchain technology. It encouraged dialogue between global watchdogs to ensure a framework.
In November, the Treasury’s Wealth Management Taskforce’s Technology Working Group (chaired by Michelle Scrimgeour, CEO of Legal & General Investment Management) announced that UK authorized investment funds should consider using distributed ledger technology. We have outlined a roadmap for starting implementation.
The blueprint has been given the green light by the Financial Conduct Authority, paving the way for UK funds to begin implementing tokenisation, and similar to the technology used, digital representations of investment fund shares and units will be created. Transactions can now be recorded on a distributed ledger. For crypto and digital assets.
HSBC estimated last year that digital assets could account for 10% of global assets under management by 2030, equating to a value of $4 trillion to $5 trillion.
However, Joseph Pinto, CEO of M&G’s fund management business, said that for asset managers and investors to benefit, the approach to fund tokenization needs to be consistent. He said there is.
“Regulators need to talk to each other to make sure regulations are the same across countries regarding how tokenization is applied,” Pinto said. The company’s Treasury Task Force had three participants.
“What we don’t want is a situation where the UK goes one way and other countries go their own way. Then we risk losing scalability.”
read Abrdn announces tokenization of £16bn flagship fund
The UK Blueprint provides a baseline model for tokenization that can be quickly implemented and used within the UK’s existing legal and regulatory framework.
Funds authorized by the FCA may use this approach if they meet certain criteria, such as investing in mainstream assets and continuing to provide valuation and settlement through the same process and period.
This approach allows for some degree of consistency between mainstream and tokenized funds, although the latter will use distributed ledger technology for sales and redemption transactions.
“It requires investment in technology and the whole value chain to engage, and we also need a good regulatory framework to deliver it. We want to further improve this,” Pinto said.
“We are seeing demand for tokenized funds, primarily among private banks who want to provide their customers with access to private assets.”
read BlackRock’s European representative: “We are considering digital assets in emea”
Some of the world’s largest asset managers, including BlackRock, are championing the potential of blockchain technology to revolutionize the sector.
Edinburgh-headquartered Abdon tokenized one of its flagship money market funds last year, the first time the asset manager has issued tokens since acquiring a stake in digital stock exchange Archax in 2022. This was my first investment product.
The companies said they will also work on other tokenization projects, including strategies that allow digital tokens to be transferred, held and managed using ledger technology.
Mr. Abdon said at the time that in the future, the company would consider using the model in its wider investment capacity, particularly in the private market, where there is a need to fragment holdings and provide additional liquidity.
Meanwhile, Sandro Pieri, CEO of BNP Paribas Asset Management, previously told Financial told the news.
Elsewhere, Schroders announced in July 2022 that it had purchased a minority stake in Forteus, an asset management company specializing in blockchain and digital assets, which will eventually allow it to offer tokenized funds to investors. He said it could become.
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To contact the author of this article with feedback or news, email David Ricketts.
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