In some parts of the world, including the US, the application of blockchain technology to assets is already in motion while in others it is not, lacking the regulatory environment for the move. The UK is one of them. The country may, however, be changing its tune as its Investment Association is currently discussing the issue with both the regulator and firms.
A tokenised fund is one where shares are represented on the blockchain, which also functions as the trading mechanism. Here, shares are recorded on a distributed ledger.
John Allan, fund operations specialist at the Investment Association explains the benefits: “Tokenised funds have the potential to bring benefits to consumers in delivering quicker settlements, and to firms in making back-office processes more efficient.” Other potential advantages are increased transaction transparency and the ability to make previously illiquid assets liquid.