The Investment Association or Investment Association, a body that represents British investment managers, is speeding up the approval by local government and financial regulators of blockchain-traded funds with digital tokens that replace traditional shares.
As the Financial Times reported on Thursday, The trade body is pushing the government to establish a new class of funds that employ blockchain technology and create a new task force to examine how distributed ledger technology could accelerate the creation of new products and services.
The reasons that justify this impulse, according to the Investment Association, are the possible significant cost savings for final investors and the simplification of the current procedures for buying and selling investment funds.
Investment Association CEO Chris Cummings urged boosting the competitiveness of domestic financial services:
“Further innovation will boost the overall competitiveness of the UK fund industry and improve the cost, efficiency and quality of the investment experience.”
According to the FT, blockchain-traded funds could be available by the end of the second quarter of 2023 if the Financial Conduct Authority (FCA) gives its regulatory approval. As the newspaper adds, A fintech group, FundAdminChain, is currently collaborating with the London Stock Exchange and four global asset managers to develop live tokenized funds for the UK market.
Brian McNulty, CEO of FundAdminChain, revealed that asset managers have realized the potential of fund tokenization to generate above-market returns:
“Tokenized funds can bring more transparency, instant settlement, data and analytics improvements that will contribute to a more efficient system for investors, but we need regulatory support to ensure the UK remains competitive with other jurisdictions.”
The Investment Association is also lobbying the FCA to consider allowing traditional mutual funds to hold cryptocurrencies and other digital assets. But if the FCA were interested in this proposal, it would still require a full consultation to push it through the regulatory process.
The first US-based on-chain mutual fund was launched in April 2021 by Franklin Templeton to process transactions and record share ownership.
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